Glencore’s Viterra to acquire Gavilon’s grain business for $1.13 billion

Glencore Plc’s agriculture arm Viterra has agreed to acquire US-based grains and ingredients business of Gavilon Group LLC from Marubeni Group at a purchase price of 1.125 billion, plus working capital, the company announced on Wednesday. 

The acquisition is expected to give Glencore - the world’s top commodity trader - a chance for significant expansion in its US agricultural business after multiple attempts spanning several years.

In 2017, Glencore made an unsuccessful approach to rival Bunge Ltd, one of the oldest and top grain companies.

“The addition of Gavilon supports our long-term strategy of significantly increasing our presence in the United States, one of the major producing and exporting regions, which will further strengthen our global network,” Viterra Limited CEO David Mattiske said in an official statement.

Gavilon is based in the US city of Omaha, Nebraska and owns large grains and ingredients assets throughout the Plains and Midwest.

The firm also holds an indirect minority ownership interest in two-port terminals that offer a gateway to Asia.

In a statement from the Marubeni group,  the Japanese company is expected to get JPY 300 billion to 400 billion (around $2.6 billion to $3.5 billion) from the deal, including loans, which are expected to be complete after a restructuring of US operations.

“Marubeni is looking to enhance the ability of its grain business to meet the demand for grain in Asian market especially Japan, a focus area for the business,” Marubeni said.

“Moreover, Marubeni is concentrating on reinforcing the handling of specialty crops, as well as developing its processing and downstream businesses,” the company added.

Marubeni acquired grain merchant Gavilon at a price of 2.7 billion in 2013 in a bid to increase its benefits from China’s booming demand for imported grain from the US.