BEIJING, CHINA — Chinese regulators on April 23 gave conditional approval to Marubeni Corp’s purchase of Gavilon, Reuters reported.
The agreement was first announced on May 29, 2012, and was expected to close in September of that year, but has been repeatedly delayed as China officials review the details.
Reuters said that in a posting on its website, the Anti-Monopoly Bureau within the Ministry of Commerce said that the merger may "eliminate or limit competition in China's soybean importing market."
Because of this, the ministry said Gavilon and Marubeni will have to maintain separate, independent trading units when selling soybeans to China, with strict firewalls to prevent exchange of market information.
American Soybean Association President Danny Murphy told Reuters that the conditions were surprising since it’s unlikely the companies would be able to control supplies or fix prices in such a large market.
"By staying at arm's length, it takes away some of the benefits for Gavilon and Marubeni," he said about the conditions. "You'll lose efficiency and probably increase costs for the companies they supply for."
Marubeni's $5.6 billion acquisition of Gavilon, an amount that includes the assumption of around $2 billion of debt, propels Japan's fifth-largest trading house into the top standings of global merchants. Marubeni gains access to Gavilon's vast grain storage network as well as a significant domestic fertilizer and oil trading operation.