Chinese regulators give approval for sale of US trader Gavilon

23 April 2013 21:55  [Source: ICIS news]

HOUSTON (ICIS)--Chinese authorities on Tuesday announced they have finally agreed to give regulatory approval for Japanese trading firm Marubeni Corporation to proceed with the $5.6bn (€4.3bn) acquisition of Omaha, Nebraska-based grain, fertilizer and energy commodities trader Gavilon.

Chinese regulators had been the final piece missing to complete the nearly yearlong transaction, as the government was allowed to have approval in the merger because the new combination is expected to eventually import an estimated 20% of the grain products coming into their country. US and European antitrust authorities had already given their approval months ago.

Although they have given the green light to proceed, the concession comes with conditions as Gavilon and Marubeni must maintain separate and independent trading operations in terms of selling to China, and are limited to how much market information can be exchanged between the distinct business units.

It is expected that the addition of Gavilon will make Marubeni a major player in the global commodity business, as it will now have access to the US company’s vast grain storage facilities as well as its substantial fertilizer and oil trading markets.

At this time, Marubeni is considered to be Japan’s fifth-largest trading firm and currently ranks as the second-largest exporter of domestic grain to China.

Gavilon officials declined to comment on the announcement.

Based in Tokyo, Marubeni is a global general trading company with a focus on food, paper, textiles and energy commodities. In 2012, it agreed to purchase Gavilon for $3.6bn plus assume $2bn in company debt. Originally, the merger was to have concluded in September 2012.

Gavilon is a privately held firm and is organized into two segments that are focused on agriculture and energy. It has operations in 13 countries with 144 grain storage facilities and 85 dedicated to fertilizer. Besides the primary business of selling and moving farm products and crop nutrients, the company also trades and stores crude oil, natural gas and renewable fuels.

($1 = €0.77)


By: Mark Milam



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