Marubeni Corp., Japan's biggest agricultural trader, agreed to acquire privately held Gavilon Group LLC, based in Omaha, for $3.6 billion, gaining control of the third-largest grain merchandiser in the United States.
Gavilon, which had been in play internationally for months, employs more than 2,000 people on six continents and owns a variety of businesses internationally. In Nebraska, it has more than 30 operations, including grain elevators, fertilizer storage and energy enterprises, including its marketing of ethanol from the E Energy plant in Adams.
The purchase will double Marubeni's grain trading capacity and is due to be completed in September, Marubeni said. Marubeni also will take on Gavilon's $2 billion of debt and use cash and loans for financing, Chief Financial Officer Yukihiko Matsumura said in Tokyo.
Marubeni’s Managing Executive Officer Daisuke Okada said the acquisition strengthens Marubeni's position in supplying Asia and Japan in particular with food materials.
Buying Gavilon will allow Marubeni to expand in the United States and compete with top U.S. grains trader Cargill Inc. Gavilon has assets ranging from storage bins to railcars and energy trading to fertilizer distribution. It reported revenue of more than $17 billion in the fiscal year ended in December.
Gavilon traces its roots to Peavey Co., acquired by ConAgra Foods Inc. in 1982. Ospraie Management LLC, the commodities hedge fund firm, Soros Fund Management LLC and private-equity firm General Atlantic LLC bought ConAgra Foods Inc.'s trading and merchandising unit from ConAgra for $2.75 billion including debt in 2008.
"Marubeni's purchase of Gavilon will give it an inroad into grain purchases in the U.S. and put it on par with the leader, Cargill," said Justin Tang, a Singapore-based analyst focusing on mergers and acquisitions with Churchill Capital. "The performance of the stock today is reflective of investors' positive expectations." Marubeni gained 2.6 percent to 517 yen in Tokyo on Tuesday. The Nikkei 225 benchmark index rose 0.7 percent.
There have been 515 purchases worth $51.3 billion this year in the agriculture and food industries globally, with Japanese companies the third most acquisitive after those in Switzerland and the United States, according to data compiled by Bloomberg. Japan's companies did not feature in the top five for last year's $133 billion worth of deals, the data show.
It would be the biggest takeover abroad by a Japanese company in a year, according to data compiled by Bloomberg. Other companies -- including Glencore International Plc, Bunge Ltd., Mitsui & Co. and Mitsubishi Corp. -- also had shown interest in Gavilon, sources told Bloomberg.
Marubeni will receive more than $100 million in annual revenue from Gavilon from the fiscal year ending March 2014, Marubeni's Matsumura said.
Marubeni's 25 million metric tons of grains trading capacity will rise to 55 million tons with the Gavilon deal and also add gas and oil trading volumes, Japanese traders said.
As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand, Greg Heckman, chief executive officer of Gavilon, said in a separate statement.
Morgan Stanley acted as adviser to Gavilon, and Marubeni hired Nomura Holdings Inc. Gavilon had hired Morgan Stanley to explore strategic alternatives, a source familiar with the matter said Jan. 20.