Marubeni Corp., Tokyo, said May 29 that it will acquire all equity interests of Gavilon Holdings LLC, Omaha, in a deal valued at $3.6 billion. The deal will close after receipt of regulatory approvals, expected to be in September.
“We are pleased that our strategic review process has resulted in an agreement to become a wholly owned subsidiary of Marubeni,” said Gavilon CEO Greg Heckman. “As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand.”
Marubeni expects to grow its business using Gavilon’s commodities trading and distribution business, which deals with fertilizer, grain, and energy commodities. Gavilon has some 2,000 employees and is ranked America’s 19th largest private company by Forbes.
In fertilizer, Marubeni noted that Gavilon owns terminals, storage, and blending facilities in 59 strategic locations across the U.S., and maintains one of the largest wholesale networks in the U.S. To date, Marubeni’s largest subsidiary is Helena Chemical Co., Collierville, Tenn., the second largest agricultural production retail business in the U.S. Helena has 17 sales divisions, with about 390 sales outlets and more than 3,639 employees. As a result of the Gavilon acquisition, Marubeni says it will now possess both retail and wholesale businesses, and in the future will be able to extend its value chain to upstream businesses of raw material origination and fertilizer production. In addition, Gavilon owns import terminals, storage, and blending facilities in 15 locations across Mexico, South America, and Africa, and distributes fertilizer in over 20 countries.
In grain, Marubeni says it will gain over 140 grain loading sites and access to a vast grains storage and distribution network in the U.S., as well as sites in key production regions outside the U.S., such as Brazil, Australia, and Ukraine, which it will combine and utilize with its existing assets. It said Gavilon’s annual grain handling volume of 30 million mt will allow Marubeni to achieve a combined handling volume of over 55 million mt, which will further its competitiveness in the global grain trade.
Gavilon’s energy business deals mainly in crude oil, natural gas, and fuels, and is operated through a vast logistics network that includes 8 million barrels of crude oil storage capacity, 10 billion cubic feet of natural gas storage capacity, and 500,000 barrels of refined products storage capacity.
Marubeni listed Gavilon 2011 revenues at $17.85 billion, up from 2010’s $7.5 billion. At the end of 2011, it said total assets were valued at $6.2 billion and capital stock was $1.83 billion.
Major Gavilon investors included Ospraie Special Opportunities (Offshore) Ltd., The Ospraie Intermediate Fund Ltd., The Ospraie Fund LP, Ospraie Special Opportunities LP, General Atlantic GVN Master LP, and Quantum Strategic Partners Ltd., as well as George Soros’ Soros Fund Management LLC and Orascom Construction Industries (OCI).
OCI confirmed that it sold its 16.8 percent stake in Gavilon Group LLC to Marubeni for $604.8 million, saying that it initially paid $340 million for its stake. OCI said it will use the proceeds to finance its Fertilizer Group expansion in North America and potentially invest in other opportunities under review. In addition, it plans to return some of the proceeds to shareholders. OCI said its Fertilizer Group will maintain its existing relationship with Gavilon under the new ownership in marketing fertilizer products in North America.