Marubeni Corp., Japan’s biggest grain trading house, is in exclusive talks to buy closely held U.S. grain handler Gavilon Group LLC for about $5 billion, including debt, according to a source.
The negotiations are in the final stages and a deal may be announced in the next several days, the source, who declined to be identified because the talks are private, said. The deal isn’t finalized and still could fall through, the source said. A Marubeni spokeswoman and Jonathan Gasthalter, a spokesman for Gavilon at Sard Verbinnen & Co., declined comment.
Buying Gavilon would allow Marubeni to expand into the U.S., the world’s largest producer and exporter of corn. Commodity traders are seeking to tap rising demand for food, driven by population and economic growth in countries including China, India and Indonesia.
“With the strength that Marubeni has in the grains business,” buying Gavilon would be “highly positive,” said Jiro Iokibe, an analyst with Daiwa Securities Co. in Tokyo. “Still, we’ll have to see how they raise the cash.”
“I’m interested in Gavilon from the point of view that it’s a trader with very strong positions in the U.S. grains business,” Marubeni Chief Executive Officer Teruo Asada said Monday. “I can’t say more than this at the moment.”
Gavilon — whose largest investor is Ospraie Management LLC, the U.S. commodities hedge-fund firm founded by Dwight Anderson — is the third-biggest U.S. grain merchandiser. It owns storage bins, rail cars, trucks and containers used to ship commodities globally, according to the Omaha, Nebraska-based company’s website. It also runs energy-trading and fertilizer-distribution businesses.
Gavilon hired Morgan Stanley to explore strategic alternatives, a source said Jan. 20. Mitsubishi Corp., Japan’s biggest trading company, considered making a bid, a source said on April 26.