Viterra Limited has secured the grain and ingredients business of Gavilon Agriculture Investment, Inc. from Marubeni Corp for US$1.125bn plus working capital. It is understood that Marubeni will keep Gavilon’s fertilizer operations and certain grain export facilities.
The deal, which will see Gavilon incorporated under Viterra’s network and branding, makes the Glencore-owned business one of the most formidable grain handlers in the world and significantly expands its reach in North America.
Gavilon, headquartered in Omaha, Nebraska, originates, stores and distributes grains and oilseeds, as well as feed and food ingredients. In addition to more than 90 assets in the US, the company also has operations in Mexico, South America, Europe and Asia. Viterra, one of Canada's largest grain handlers, was formed in 2007 when the Saskatchewan Wheat Pool acquired Agricore United. In 2012, Swiss commodity trading giant Glencor purchased the Canadian grain firm, and in 2020, Glecore's global ag business, spanning 37 countries, was rebranded under Viterra.
"Gavilon’s grain and ingredients business fits within our value chain and aligns well into our core business, and also aligns with our strategy to increase producer direct origination," a Viterra spokesperson told this publication. "This further strengthens our global network by providing us a material presence in every major producing and exporting market in the world, and makes us one of the largest origination businesses in our industry.
“This acquisition allows us to create new opportunities for customers throughout our supply chain, by connecting them to our global marketplace. Through this transaction, Viterra has expanded its pipeline from origination to destination, supporting marketing opportunities in our global supply chain.”
Gavilon’s office and management team will remain in Omaha, we were told. “It gives me great pleasure to welcome Gavilon's employees to the Viterra team,” commented Viterra CEO, David Mattiske. “I look forward to a smooth integration as we work together to generate further opportunities for our employees and customers, while creating added value for our shareholders and investors.”
What sealed the deal?
Weaker grain prices and market volatility resulted in a series of impairment losses for Gavilon's Japanese owner Marubeni, who purchased the company for US$2.7bn in 2013.
Marubeni first announced it would sell Gavilon to Glencore-owned Viterra on January 26, 2022, with the transaction expected to complete by end of March 2023. Explaining the decision to sell the grain and ingredients business, Akira Terakawa, senior executive vice president at Marubeni, said in a news conference that his firm’s initial goal had been ‘to become a global grain major…by expanding trade volume, but the strategy didn't work as bigger volume posed higher market risk’.
Despite the grain supply market’s recovery in recent years, Marubeni went ahead with the transaction, though the Japanese firm is understood to be exploring opportunities to further strengthen its grain business in Asia.