Here's how Wilmar will milk benefits from its Africa expansion

It bought 27.5% stake in Consumar SA.

According to CIMB, Wilmar has acquired a 27.5% stake in Cosumar SA, a company listed on the Casablanca Stock Exchange, for an aggregate cash consideration of MAD2.3bn (US$263m) from Societe Nationale d'Investissement (SNI).

CIMB noted that Wilmar's investment in Cosumar offers Wilmar exposure to a unique asset in a stable investment environment, as well as exposure to one of the largest sugar producers in North Africa – which is facing a sugar-deficit situation and offers a stable platform for the group to expand its sugar operations in Africa.

Here's more:

We believe that post-acquisition, Wilmar can enhance the profitability of the business by 1) introducing better sugar farming techniques (from its Australian sugar arm, Sucrogen), 2) improving the procurement process of raw sugar for the refinery, and 3) exploring the export potential for the region as there issurplus capacity at Cosumar's port-based sugar refinery.

There are also potential synergies to be derived through efficiency gains from its milling and refining facilities.

The acquisition will expand Wilmar's sugar business exposure to Africa. Wilmar currently operates five sugar refineries in Australia, New Zealand and Indonesia, with a total annual production capacity of 2m tonnes. It is also Australia's largest cane milling company, with an annual milling capacity of 17m tonnes.

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