Grain firm Viterra’s plans to buy an expanded global reach are about to move forward with a 10-figure deal for the bulk of U.S. ag commodity firm Gavilon’s grain business.
Viterra, owned by commodities firm Glencore and two Canadian public-sector pension funds, announced Wednesday it will pay $1.125 billion to buy Omaha-based Gavilon from the U.S. arm of Japanese import/export firm Marubeni Corp. (all figures US$).
The deal would give Viterra all but eight grain handling facilities in Gavilon’s network of 93 sites across 20 U.S. states.
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It also gives Viterra a 25 per cent share of Kalama Holdco, a holding company with a 60.6 per cent stake in Pacificor, a grain export business in the U.S. Pacific Northwest, with terminals at Kalama, Wash. and Portland, Ore.
Marubeni’s U.S. arm said it will keep eight as-yet-unspecified Gavilon elevators in the northern U.S. and operate them instead through another of its subsidiaries, Columbia Grain.
Columbia would also have the other 75 per cent of Kalama Holdco. The rest of Pacificor is held by ADM and Mitsubishi-owned grain trader Agrex.
Marubeni will also keep Gavilon’s U.S. fertilizer business and a Memphis-based U.S. crop input retail business, Helena Agri-Enterprises.
Viterra said it will finance the deal via a combination of acquisition-specific financing facilities, cash at hand and other available credit lines. Pending the usual regulatory approvals, it said it expects to close the deal in the second half of 2022.
The eight Gavilon elevators going to Columbia Grain are to be based on Marubeni’s plans to “enhance the ability of its grain business to meet demand for grain in Asian market(s,) especially Japan.”
To do so, Marubeni said it plans to boost its own grain trade flow “based on its grain handling operations in the northwest United States and exportation from the (Pacific Northwest) as its two major strengths.”
Marubeni said it’s also keeping the fertilizer and ag input businesses as it “aims to further strengthen the presence of its fertilizer business within the domestic agri-input market in the United States.”
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.
Marubeni bought up much of The Gavilon Group, except for its energy business, in 2013 for $2.6 billion plus related debt.
In deciding to sell, Marubeni said Wednesday it had “deliberated on the significance of holding on to Gavilon’s grain business” and, given the recent uptrend in the grain sector generally and “Gavilon’s good outcomes recently,” it “recognized an opportunity to transfer Gavilon’s grain business on appropriate terms.”
Gavilon, in its fiscal year ending March 31, 2021, booked consolidated profit (before income taxes) of $300 million — up from a $1.04 billion year-earlier loss, and a $186 million loss the year prior.
For its part, Viterra — already one of Canada’s biggest grain firms — has reportedly been keen to expand its reach within the Americas and Australia. Reuters in November quoted unnamed sources as saying Viterra aims to do so through specific bolt-on acquisitions.
“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,” said David Mattiske, CEO of Viterra Ltd., the Rotterdam-based company known until late 2020 as Glencore Agriculture.
“The combination of the Gavilon and Viterra origination businesses will enable us to provide more value and flexibility to our customers,” Mattiske said in Viterra’s release Wednesday.
“We will be able to rapidly enhance our sustainable supply chains (and) provide higher levels of quality control and reliability, while creating exciting opportunities for our customers and employees.” — Glacier FarmMedia Network
