Marubeni has agreed to buy commodity manager Gavilon Group for $3.6 billion in a takeover that will create one of the world’s largest grain traders and better compete with industry leaders like Cargill and Archer Daniels Midland (ADM).
The deal by Tokyo-based Marubeni, which is one of the biggest trading houses in Japan, will help tap growing demand for corn in China and boost its grain trading volumes, the company said in a statement.
The transaction represents the largest cross-border acquisition by a Japanese company so far this year, according to MarketWatch, citing data from Dealogic.
Gavilon CEO Greg Heckman said that joining a larger trading organization will allow the company to more efficiently connect its grain and fertilizer supply with growing global demand.
He anticipates just minimal changes to the No. 3 biggest U.S. grain storage and distributor’s organization and operations from the takeover.
Marubeni aims to trade 25 million metric tons of grain in the current fiscal year ending March 2013. It noted that Omaha, Neb.-based Gavilon's 30 million tons could lift its global grain handling volume to more than 55 million tons and help it tap growing demand for corn in China.
The transaction is expected to lift Marubeni’s bottom line by more than $100 million from the prior fiscal year.