Viterra has announced a multi-billion dollar deal that would significantly expand the grain company’s presence in the U.S. and other parts of the world.
The company says it has reached a stock purchase agreement with Japan-based Marubeni Corporation to acquire Gavilon for US$1.125 billion plus working capital.
Gavilon is based in Omaha, Nebraska, and has a vast network of grain handling and storage assets across the U.S., as well as operations in Mexico, South America, Europe, and Asia, with around two thousand employees. Gavilon also holds indirect minority ownership in two port terminals located in Kalama, Washington and Portland, Oregon.
“The addition of Gavilon supports our long-term strategy of significantly increasing our presence in the United States, one of the major producing and exporting regions, which will further strengthen our global network,” says Viterra CEO David Mattiske, in a news release. “The combination of the Gavilon and Viterra origination businesses will enable us to provide more value and flexibility to our customers. We will be able to rapidly enhance our sustainable supply chains, provide higher levels of quality control and reliability, while creating exciting opportunities for our customers and employees.”
Viterra – one of the largest grain handlers in Canada – was originally formed when the Saskatchewan Wheat Pool acquired Agricore United (which evolved out of the Alberta Wheat Pool, Manitoba Pool, and United Grain Growers) in 2007.
Glencore, the Switzerland-based commodity trading and mining giant, then acquired Viterra in 2012. In 2016, Glencore sold a 40 per cent stake in Viterra to the Canada Pension Plan Investment Board and another 9.99 per cent stake to the British Columbia Investment Management Corporation (BCIMC).
“This transaction demonstrates the continued support of our shareholders to execute on opportunities that deliver significant growth for our business, while maintaining a robust balance sheet. Funding for the agreed purchase price and a portion of the assumed working capital has been secured through the signing of a committed acquisition financing facility,” notes Viterra’s chief financial officer Peter Mouthaan. “Funding for the remainder of the working capital will be financed by using proceeds from other committed financing facilities and cash on hand, including existing available undrawn committed credit lines amounting to approximately US$3.6 billion as of 31 December 2021.”
Gavilon was formed in 2008 when a group of investors acquired ConAgra Trade Group. Its agriculture business was then acquired by Marubeni Corporation in 2013.
The deal is subject to the usual closing and regulatory approvals. Viterra says it expects to close in the second half of 2022.