June 1, 2012

Marubeni settles Gavilon acquisition deal for US$3.6 billion


The takeover of US grain merchant Gavilon by Japanese trading house Marubeni Corp has been settled at US$3.6 billion.

This acquisition places the company in an excellent position to challenge Archer Daniels Midland as the biggest supplier of grains and oilseeds from the United States to China.


Marubeni, the second largest exporter of US grains to China, has been in negotiations with Gavilon, the third largest US grain merchant, since early May. Gavilon has a debt of about US$2 billion, Marubeni said, which would take the total value of the transaction to US$5.6 billion, slightly higher than the US$5.2 billion price tag that had been reported in recent months.

According to Marubeni, the acquisition will nearly double its grain trading volumes, extending an already wide lead over its Japanese rivals as it bets big that China's demand for imported corn will continue to surge ahead, surpassing Japan's 16 million tonnes a year of imports in as little as three years.

The company expects the deal to lift its bottom line by more than US$100 million from next year.

They also said there are no plans to sell off parts of Gavilon's operations, which also include a major US fertiliser distribution network and a mid-sized energy trading desk that includes crude oil and natural gas storage facilities.

The acquisition would be partly financed by bank borrowing.