By Karl Plume
Jan 27 (Reuters) – Global commodities merchant Glencore Plc
in the international food chain with a deal to buy the grains
business of U.S.-based Gavilon.
The acquisition, due to close in the second half of this
year and subject to regulatory review, gives Glencore’s Viterra
unit significantly more physical grain handling assets in the
United States.
It would also would elevate Viterra to the third-largest
exporter of Brazilian soybeans, ahead of Archer-Daniels-Midland
Co
agency.
Rising demand for food and biofuels made from crops has
generated record profits for large grain companies, including
ADM and Cargill Inc.
The deal, however, falls short of elevating Glencore, among
the largest global metals and energy merchants, to the upper
tier of global grains traders because of its limited presence in
the United States, U.S.-based export traders said. The club
includes ADM, Bunge Ltd
[AKIRAU.UL]. Glencore’s previous attempts to join this elite
group of merchants known as the ABCDs of grain included failed
acquisition approaches to Bunge and Dreyfus in recent years.
“This puts them among the players that can physically
originate grain (in the United States), rather than just a paper
trader. It elevates their status, but they’d have to spend a lot
more money to be on the level of ADM or Cargill or Bunge,” said
a U.S. exporter who asked not to be named.
Viterra has grains handling assets like elevators and ports
in Canada, Europe and South America, but the company has only
trading offices and very limited grain storage and
transportation in the United States. The company said the
Gavilon acquisition would “provide more value and flexibility”
to its customers.
But Gavilon parent company Marubeni said it would
retain eight Gavilon grain elevators in the northern United
States, as well as “part of the equity interest” in a grains
export terminal in the U.S. Pacific Northwest, a crucial outlet
for U.S. shipments to Asia.
The deal may benefit U.S. farmers as Glencore’s global
trading and shipping networks allow Viterra to be more
competitive when buying grain from them.
“This for them is a very good entry into the U.S. market and
it will increase competition for bushels,” said Sterling Smith,
director of agricultural research at AgriSompo.
“It potentially could open up more multinational activity
and I could see it being positive for exports over time, opening
up new markets particularly markets like Europe where Glencore
is quite strong.”
(Reporting by Karl Plume in Chicago; Additional reporting by
Marcelo Teixeira in New York; Editing by Cynthia Osterman)
(([email protected]; +1 313 484 5285; Reuters
Messaging: [email protected]))
Keywords: GLENCORE GAVILON/ (PIX)
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