ROTTERDAM, NETHERLANDS — Viterra Ltd. announced it has reached an agreement to acquire many of the assets of Omaha, Nebraska, US-based Gavilon from Marubeni Corp. for $1.125 billion, plus working capital.
Gavilon originates, stores and distributes grains, oilseeds, as well as feed and food ingredients, to food manufacturers, livestock producers, poultry processors, soybean processors and ethanol producers worldwide. The company has 105 grain storage facilities and total grain storage capacity of 345.447 million bushels, according to Sosland Publishing’s Grain & Milling Annual 2022.
Gavilon was established in 2008 with the sale by Conagra Foods Inc. of its Trading and Merchandising business to Ospraie Management LLC Special Opportunities Fund in a $2.1 billion transaction. With the sale, the business was renamed Gavilon LLC. The business was later acquired by Marubeni for $2.7 billion in 2013.
Today, Gavilon’s asset network is located in key growing areas across the United States, with access to major railroads, rivers and ports. It also has international operations in Mexico, South America, Europe and Asia, along with an indirect minority ownership interest in two port terminals located in Kalama, Washington, US, and Portland, Oregon, US.
According to Marubeni, the transaction will not include eight grain elevators held and operated by Gavilon in the northern United States. Those elevators will be transferred to Columbia Grain International, a subsidiary of Marubeni. Additionally, part of the equity interest of Kalama Holdco, LLC, a joint venture grain export terminal business on the US West Coast that is held by Gavilon, will be transferred to Columbia Grain International. Gavilon’s fertilizer business also is not included in the transaction and will be transferred to Marubeni America Corp.
“The addition of Gavilon supports our long-term strategy of significantly increasing our presence in the United States, one of the major producing and exporting regions, which will further strengthen our global network,” said David Mattiske, chief executive officer of Viterra Ltd. “The combination of the Gavilon and Viterra origination businesses will enable us to provide more value and flexibility to our customers. We will be able to rapidly enhance our sustainable supply chains, provide higher levels of quality control and reliability, while creating exciting opportunities for our customers and employees.
“We look forward to welcoming the employees of Gavilon to the Viterra team, and further strengthening the successful business and commercial relationships Gavilon has built with producers and consumers.”
Peter Mouthaan, chief financial officer at Viterra, said the transaction demonstrates “the continued support of our shareholders to execute on opportunities that deliver significant growth for our business, while maintaining a robust balance sheet.”
Viterra is the crop trading business spun out of Glencore back in November 2020. Viterra has more than 17,500 employees operating in 37 countries, and its network of storage, processing and transport assets connects producers and consumers to supply sustainable, traceable and quality-controlled agricultural products. According to the Grain & Milling Annual 2022, Viterra has a total of 85 grain storage facilities with a total storage capacity of 120.36 million bushels in North America.
Marubeni said the decision to sell Gavilon’s grain business followed re-evaluations of its grain business strategies and goals, and reflected the uptrend in the grain supply industry and Gavilon’s good outcomes recently. As part of its post-divestiture strategy, Marubeni said it is “looking to enhance the ability of its grain business to meet demand for grain in the Asian market, especially Japan, a focus area for the business.”
“To achieve this, Marubeni will work to further strengthen its grain business’s trade flow based on its grain handling operations in the northwest United States, and exportation from the PNW as its two major strengths,” Marubeni said. “Moreover, in response to heightened consumer awareness and concern over health and environmental issues, Marubeni is concentrating on reinforcing the handling of specialty crops, as well as developing its processing and downstream businesses. Marubeni has positioned the eight grain elevators in the northern United States, and equity interest in the JV grain export terminal business in the PNW that are to be transferred to CGI, as the focal points within the abovementioned strategy.”
The transaction is expected to close in the second half of 2022.