Marubeni revises Gavilon deal, excludes energy

Tokyo — Marubeni Corp., the Japanese trading company that agreed last year to buy Omaha-based Gavilon Holdings LLC, reported on June 10 that a new agreement has been reached whereby Gavilon’s energy business will be excluded from the deal and Marubeni will pay $1 billion less than the original sum. Marubeni said in May 2012 (GM June 4, 2012) that it would pay $3.6 billion for Gavilon plus additional debt in a deal that was expected to close by the fall, pending regulatory approvals. Under the revised agreement, Marubeni will pay $2.6 billion for all of Gavilon minus its energy unit. At the time of the initial deal, Marubeni touted the acquisition of Gavilon’s grain and fertilizer assets, saying both businesses would further its competitiveness in the global grain and fertilizer trade. Marubeni said little about what advantages the energy business would bring, however, saying only that Gavilon’s energy sector deals “mainly in crude oil, natural gas, and fuels, which 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.” Marbubeni said last week that it has received the necessary approvals for the deal from all relevant competition authorities. China’s regulatory authority has granted conditional approval, however, and Marubeni said it is “currently in the process of fulfilling those conditions.” Chinese authorities said in April that their approval hinged on Marubeni and Gavilon continuing to sell soy to China as separate companies with no interchange of market intelligence. Gavilon has some 2,000 employees, and past investors included Ospraie Management, George Soros’ Soros Fund Management LLC, and Orascom Construction Industries (OCI). OCI confirmed last year that it sold its 16.8 percent stake in Gavilon Group LLC to Marubeni for $604.8 million, and would use the proceeds in part to finance its Fertilizer Group expansion in North America.