CSR Limited today announced that it hasreached an agreement with Man Group plc to purchase Man Group’s 25% interest inthe Sugar Australia Joint Venture and in New Zealand Sugar Company Limited.

This acquisition increases CSR’s ownership of the two sugarrefiners to 75% with the remaining 25% held by Mackay Sugar Co-operativeAssociation Limited. It is subject tocompletion processes.

CSR Managing Director Alec Brennan said, “CSR has acquiredthe increased stake in the sugar refining businesses on attractive terms. Therefining acquisition provides a relatively stable source of earnings, whichhelps to mitigate the effect of the volatile world raw sugar price on theprofitability of our sugar operations.”

Australia’s largest sugar refiner, Sugar Australiaoperates refineries in Mackay (Queensland) and Melbourne, and a liquid sugarfacility in Perth. New Zealand Sugar’s refinery in Auckland is the only sugarrefiner in the country. Total combinedproduction of refined sugar is around 850,000 tonnes per annum. Both companies export to Asia and thePacific Islands.

The purchase price is approximately $A61m, which includes recognition of cashbalances in the acquired companies. The acquisition represents a purchase pricemultiple of 5 times earnings before interest and tax (EBIT) of the combinedbusinesses over an average of the last four years to 31 March 2003 “Theacquisition will be EPS positive immediately and will cover its cost of capitalin the first year” said Mr Brennan.

CSR’s earnings from the refining investments for thefinancial year ended 31 March 2004 are expected to be around 30% below theprevious year due to restructuring costs, lower sales to the food and beveragesegment and reduced container exports.

“Sugar refining is a business CSR knows well. We’ve been a leader in the industry for morethan a hundred years. The acquisitionstrengthens the position of our overall sugar business” said Mr Brennan.