Marubeni said close to buying U.S. grain trader Gavilon

Purchase comes amid widespread interest in U.S. commodities firm

Corn Corn

May 8 (Bloomberg) -- Marubeni Corp. is in exclusive talks to buy closely held U.S. grain handler Gavilon Group LLC for about $5 billion including debt, according to a person familiar with the situation.

The negotiations are in their final stages and a deal may be announced in the next several days, said the person, who declined to be identified because the talks are private. The deal isn’t finalized and could fall through in the final stages, the person said. A spokeswoman for Marubeni declined to comment. No one at Gavilon could immediately be reached for 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. Glencore International Plc, which in March agreed to buy Canadian grain-handler Viterra Inc. for C$6.1 billion ($6.1 billion), expects Asian consumption to drive annual growth of as much as 3.5 percent in global grain and oilseed demand.

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, railcars, 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.

The Nikkei newspaper reported earlier that Marubeni is in talks to buy Gavilon.

Glencore Interest

Gavilon hired Morgan Stanley to explore strategic alternatives, a person familiar with the matter said Jan. 20. Mitsubishi Corp., Japan’s biggest trading company, considered making a bid, a person familiar said on April 26. Tokyo-based Mitsui & Co., Baar, Switzerland-based Glencore, Bunge Ltd. of the U.S. and Singapore-based Wilmar International Ltd. also have shown interest in Gavilon, people with knowledge of the matter said March 6.

“The fact that there’s been widespread global interest in the assets is little surprise,” said Steve Hansen, a Vancouver- based analyst at Raymond James. “There is all kinds of debate about what these assets are worth.”

Gavilon traces its roots back to Peavey Co., acquired by ConAgra Foods Inc. in 1982. Ospraie, Soros Fund Management LLC and private-equity firm General Atlantic LLC bought ConAgra Foods Inc.’s trading and merchandising unit in 2008 for about $2.75 billion including debt. Gavilon has about 2,000 employees in 300 locations on six continents, it said in a March 7 statement.

Bloomberg News

--With assistance from Sonja Elmquist in New York, Shruti Singh in Chicago and Yuriy Humber and Ichiro Suzuki in Tokyo. Editors: Simon Casey, Elizabeth Wollman

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