State-owned China National Cereals, Oils and Foodstuffs Corp (COFCO) said on Wednesday it will pay $1.5 billion in cash for a 51 percent stake in the agribusiness operations of Hong Kong-based Noble Group Ltd, the second big move by China's largest food trader within two months.

The deal is part of COFCO's drive to help feed the nation's ravenous demand for grain, oil and other farm products.

COFCO will acquire the stake in Noble Agri Ltd from Noble Group, a global supply chain manager of agricultural and energy products, metals and minerals that is based in Hong Kong.

A consortium of international investors led by Hopu Investment Management Co, a private equity fund, will join COFCO as a minority co-investor in this acquisition. COFCO will hold two-thirds of a joint venture investment vehicle, with the balance held by the Hopu-led consortium.

COFCO Chairman Ning Gaoning said Noble Agri's supply chain management system and origination capabilities complement COFCO's logistics, processing and distribution network in China.

"Incremental trade volumes from COFCO as a strategic investor will create significant synergy and value," Ning said.

Established in 1998, Noble Agri is mainly engaged in trading and processing farm products sourced from low-cost regions around the world to supply markets with high demand in Asia and the Middle East.

Noble Agri's products from the largest segment - grains - include wheat, corn and soybeans. Coffee, cocoa, sugar and cotton round out the field.

The company generated $15.49 billion in revenue last year.

The move follows COFCO's purchase in February of a 51 percent stake in grain trader Nidera BV of the Netherlands to gain direct access to South American oilseed and grain supplies.

These two deals are COFCO's largest overseas acquisitions so far. It is now able to control about $11 billion of assets throughout the world, the company said in a statement.

"Holding stakes in these two agribusiness companies will help COFCO gain direct access to buy oilseed, corn, soybeans and edible oils in the world market, especially in South America, Australia and Europe, as well as further ensuring the grain security of the world's most populous country," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

Ding said the deal highlights China's efforts to secure ownership of more agricultural products overseas, given the constraints on domestic production and dependence on imports, especially for soybeans and wheat.

"We feel confident about our partnership with COFCO and believe that with the financial and business support of our new partners, we will accelerate the execution of our strategy," said Richard Elman, chairman of Noble Group.

Noble Agri will become the principal international origination platform for COFCO, with its upstream origination and trading operations linked to the downstream processing and distribution capabilities of COFCO and its affiliates in China to create a fully integrated value chain, consistent with COFCO's strategy for global expansion, the company said.

Timeline

COFCO'S OVERSEAS EXPANSION

2014

Announces plan to acquire 51% of agribusiness of Noble Group Ltd

Purchases 51% of grain trader Nidera BV

2013

Builds milk powder factory in New Zealand

2011

Acquires Australian sugar producer Tully Sugar Ltd

Buys Chateau Viaud in France