/

China slaps conditions on Marubeni’s Gavilon deal

Kyodo

Marubeni Corp.’s plan to acquire U.S. commodities trader Gavilon Holdings LLC is acceptable as long as the two companies keep their soybean operations for China separate, the Chinese Ministry of Commerce said.

The ministry said Wednesday that the acquisition could help Marubeni increase its grip on the market for imported soybeans in China and curb competition.

China imported 58.38 million tons of soybeans in 2012, the ministry said. Marubeni handled 10.5 million tons, far outpacing Japan’s other trading houses.

It is a tough condition to swallow for Marubeni, which wanted to bolster cereal exports to emerging markets like China.

“We would like to withhold any comments while we are taking a detailed look at the conditions presented by the Chinese authority,” a Marubeni public relations official said.

The trading house announced last May it would buy Gavilon for around $3.6 billion. It was hoping to complete the deal in September but ran into delays getting approval from China.

China also banned Marubeni’s U.S. units from buying soybeans from Gavilon in principle, and prohibiting the two from exchanging data on soybeans. This means Marubeni won’t be able to supply China with soybeans procured via Gavilon’s U.S. network, diluting the benefits of the acquisition.

“China is concerned about soybeans and doesn’t mention other crops such as corn and wheat,” a trading source said. “Marubeni may feel pain, but I don’t think the whole acquisition deal will collapse.”