Marubeni close to buying Gavilon for $5.2 billion: source

Tue May 8, 2012 5:35am EDT
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By Emi Emoto and Risa Maeda

TOKYO (Reuters) - Marubeni Corp is in advanced talks to buy U.S. grain and energy trader Gavilon for about $5.2 billion including debt, a source close to the deal said on Tuesday, as Japanese trading houses expand an overseas buying spree to secure grain supplies.

The board of Japan's fifth-largest trading firm will meet as early as this week to discuss the offer, the person said, adding that Marubeni also needs to talk to its creditors to arrange finance. The source declined to be identified as the talks are private.

Japan's five big trading houses, or shosha, have been spending billions of dollars in recent years to buy natural resources, including copper mines and oil and gas producers on the back of a strong yen and a decade-long commodities boom.

Concerns about China grabbing more of the world's food supply have led them to expand in farm commodities, particularly in the United States and Canada. As well as securing domestic supplies, they are looking to position themselves to supply China's growing demand.

"Marubeni has been aggressive in expanding its business in the past few years against the backdrop of increasing grain demand in China and other countries," said Akio Shibata, president of Natural Resource Research Institute.

"Their move is aimed to take advantage of this global trend," he said.

If the deal is completed it would be the largest overseas acquisition by a Japanese trading house since Mitsubishi bought a 24.5 percent stake in the southern Chilean properties of Anglo American for $5.39 billion in November last year, according to ThomsonReuters data.

Gavilon, whose owners include George Soros and hedge fund manager Dwight Anderson, has a sizeable presence in key U.S. agricultural markets, boasting the third largest U.S. grains marketing network behind Archer Daniels Midland and Cargill.   Continued...

The logo of Japanese general trading company Marubeni Corp is seen at the company's head office in Tokyo. REUTERS/Stringer