It entered into a stock purchase agreement with the US subsidiary of Japan’s Marubeni Corporation, to acquire Gavilon Agriculture Investment, Inc (Gavilon). The agreed purchase price is US$1.125bn, plus working capital, with it subject to certain customary purchase price adjustments.
The deal is subject to customary closing and regulatory approvals and is expected to close in the second half of 2022.
As well as expanding the business’ footprint in the US, the move will further strengthen Viterra’s global network, said David Mattiske, CEO. “The combination of the Gavilon and Viterra origination businesses will enable us to provide more value and flexibility to our customers.”
Viterra, which is present in 37 countries, is a top-five global trader in sourcing oilseeds, such as soy, rapeseed and sunflower, and grains, including wheat, corn and barley, which are complemented by sugar, pulses and cotton. It is owned 49.99% by mining and commodity company Glencore, with another 40% of the company held by Canada Pension Plan Investments and 9.99% held by British Columbia Investment Management Corp.
Based in Omaha, Nebraska, Gavilon originates, stores and distributes grains, oilseeds, as well as feed and food ingredients, to food manufacturers, livestock producers, poultry processors, soybean processors and ethanol producers worldwide.
Its assets are located in key growing areas across the US, with access to major railroads, rivers and ports. It also has international operations in Mexico, South America, Europe and Asia, along with an indirect minority ownership interest in two port terminals located in Kalama, Washington and Portland, Oregon.
The analyst view
A Fitch Ratings' report on the deal views it as favorable: "The acquired business' large network of silos and infrastructure in the US will add a valuable presence in the US to Viterra's already efficient and integrated network of storage, handling, shipping and processing assets in select advantageous parts of the world. Viterra already trades all of the commodities that are within Gavilon's focus, providing a good scope for synergies in terms of risk management, customers and use of the two companies' infrastructure."
Viterra, similar to its peers, has benefitted since 2H20 from high agricultural commodity prices, which have led to its revenue surging 42% to €20bn in 1H21, noted the report. "We expect this trading environment to continue into 1H22, facilitating the company's ability to absorb acquisition debt."