Marubeni makes friendly play for Gavilon

Japanese commodity giant Marubeni Corp. plans to make a size-US$3.6 billion footprint in the North American grain industry by buying a major U.S. player.

The Tokyo firm on Tuesday announced its friendly bid for The Gavilon Group, an Omaha commodity management company that ranks in the top 20 privately-held companies in the U.S.

"We are pleased that our strategic review process has resulted in an agreement to become a wholly owned subsidiary of Marubeni," Gavilon CEO Greg Heckman said in a release Tuesday.

"As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand," he said, adding that the two companies "anticipate minimal changes to our organization and operations."

Gavilon started life in 1874 as grain handler Peavey Co. and went public in 1982 as the commodity trading and merchandising arm of U.S. agrifood giant ConAgra, which spun off the business to form The Gavilon Group in 2008.

The company now bills itself as the third-largest grain merchandising operation and leading feed ingredient business in the U.S., controlling one of the largest fertilizer distribution networks in the world.

Gavilon operates a regional agriculture office in Winnipeg and energy regional office in Calgary. It also owns crop transload and storage facilities at Lethbridge and nearby Barnwell, Alta. and at St-Alexandre, Que., on the St. Lawrence River south of Riviere-du-Loup.

By buying Gavilon, Marubeni will own 140 grain loading sites and "access to a vast grains storage and distribution network in the U.S., as well as sites in key production regions outside of the U.S. such as Brazil, Australia and Ukraine," the proposed buyer said Tuesday.

"While our global targeted handling volume of grains for 2012 is 25 million tons, with Gavilon’s handling volume of more than 30 million tons, will achieve a combined handling volume of over 55 million tons which will further our competitiveness in the global grains trade."

Gavilon also owns fertilizer terminals, storage, and blending facilities at 59 sites across the U.S., while Marubeni operates "the second largest agricultural production products retail business in the U.S."

Marubeni, which has Canadian offices in Vancouver and Toronto, has bought and sold stakes in Canada’s grain industry in the past, including a five per cent interest in UGG, now part of Viterra, in 1997.

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