Marubeni Corp., Japan's biggest grain trading company, is in exclusive talks to buy U.S. grain and energy trader Gavilon LLC for about $5.2 billion including debt, media reports said Tuesday, citing sources close to the deal.
Marubeni is in negotiations with Gavilon's top shareholders, including U.S. investment firm Ospraie Management LLC, over plans to acquire the third-biggest U.S. grain merchandiser, Bloomberg reported.
The negotiations are in the final stages and a deal may be announced in the next several days, although the deal may still fall through, according to Bloomberg.
The Gavilon project would be very positive, Akira Kishimoto, an analyst with JPMorgan Securities Japan Co. in Tokyo, told Bloomberg.
Acquiring Gavilon will elevate Marubeni, the world's sixth largest grain dealer, into the ranks of top five of global grain suppliers alongside Cargill Inc. of the U.S.
Marubeni is due to handle 25 million metric tons of grain for the fiscal year ending March 31, 2013, while the Omaha, Nebraska-Gavilon processes about 20.0 million metric tons of corn, wheat and other grains a year.
If the deal is completed, it would be one of the largest investments by a Japanese trading company outside the natural resources and energy field, the Nikkei business daily said.
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, Akio Shibata, president of Natural Resource Research Institute, told Reuters. Their move is aimed to take advantage of this global trend.
Shares of Marubeni Corp. (Tokyo: 8002) rose 3.77 percent to 550 yen in Tuesday's trading.