Wilmar International has gained control of more than half of Australia's raw sugar output with the Aus$1.75bn ($1.5bn) by buying CSR's sugar business from under the nose of a longstanding Chinese suitor.

Wilmar said the acquisition of the CSR business, Sucrogen, would "jump start" a campaign "to "build a significant sugar business", adding to the agribusiness operations which have already made the Singapore-based group the world's biggest palm oil producer, with a market value of some $31bn.

Kuok Khoon Hong, the Wilmar chairman and chief executive, said the group would "work with Sucrogen's management to create synergies and to pursue growth strategies in Indonesia and other high potential Asian markets".

Sucrogen, the world's second biggest exporter of raw sugar, offered a "good strategic fit" with Wilmar, he added.

'Very last gasp' 

The deal is the latest in a series of takeovers in sugar, with American Sugar Refining buying most of the refining operations of Tate & Lyle, the UK sector veteran, last week, while Bunge has bought a series of Brazilian mills.

And it comes some six months after bosses at CSR, which is mainly a building products group, revealed an approach from China's Bright Food for Sucrogen, which they had intended to spin off into a separately-listed group.

However, the Bright Food over the weekend made a cash offer of between Aus$1.65bn-1.7bn, lower than the Aus$1.7bn bid indicated in April.

Jeremy Sutcliffe, the CSR chief executive, said that Wilmar sealed the deal with an offer at the "very last gasp".

"At the end of the day [Bright Food] didn't quite get there in terms of price or certainty," he said.

Bright Food's failure represents the second time a Chinese suitor has lost an Australian bid after a last-minute cut to bid terms, after a similar tactic by state-owned Sinochem in December prompted chemicals group Nufarm to favour a tie-up with Japan's Sumitomo Chemical.

There has also been some concern in Australia at the levels of commodity assets falling into Chinese hands.

'Not cheap' 

The Wilmar deal as yet requires approval by Australia's Foreign Investment Review Board and Overseas Investment Board.

Indeed, CSR said it plans for demerging Sucrogen were still on the drawing board, in case the Wilmar deal, which is not expected to falls through, with potential deal-breaking events including a "material adverse change" in the business which would reduce its value, including debt, by 15% or more.

The disposal was welcomed by CSR investors, who sent the group's shares up 3.5% to Aus$1.755 in Sydney.

In Singapore, Wilmar stock ended 2.3% higher at Sing$5.88.

Analysts at Malaysia-based broker AmBank said that the deal was "not cheap", at a price-to-earnings ratio of 17 times, and a price-to-book multiple of 1.9 times.

"We believe that the premium is due to Sucrogen's strong market share and positioning in the sugar business in Australia," the broker added, maintaining a "hold" rating on Wilmar stock.