(Bloomberg) — Japanese trading giant Marubeni Corp. expects to get as much as 400 billion yen ($3.51 billion) from selling the grain business of its U.S. unit Gavilon Agriculture Investment Inc. to Viterra Ltd.
Marubeni will transfer shares of Gavilon to Viterra following a reorganization of Gavilon’s structure, the Tokyo-based company said in a statement. While the price will be determined later, Marubeni said it expects to receive 300 billion to 400 billion yen of funds from the sale, including the collection of loans.
Viterra said in a separate statement that the agreed purchase price is $1.125 billion, plus working capital.
The decision is made after considering the “uptrend in the grain supply industry,” Marubeni said. The company saw an opportunity to transfer Gavilon’s grain business on “appropriate terms” and assessed that it would be able to maximize its own consolidated asset value, it added.
Crop markets have been on a tear, with the Bloomberg Agriculture Spot Index near the highest level since 2012. Bad weather has hit harvests, China’s bought huge quantities of the world’s crops to feed its hog herd, while soaring freight costs and labor shortages have roiled the food supply chain. An energy crisis has also caused a dramatic surge in fertilizer bills for farmers globally.
Gavilon’s fertilizer business will be transferred to Marubeni’s U.S. unit, according to the statement. The trading house expects a record profit this fiscal year through March, along with its domestic peers, as commodity prices surged. Viterra is the rebranded name of Glencore Plc’s agriculture unit.
The deal is expected to close during the fiscal year ending March 31, 2023. Marubeni will hold a briefing later Wednesday to discuss the sale.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
