Grain trader Gavilon gets Asian takeover interest

NEW YORK/LONDON Wed Mar 21, 2012 6:05pm EDT

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NEW YORK/LONDON (Reuters) - Several Asian trading firms, including Mitsui & Co (8031.T), Marubeni Corp (8002.T) and Noble Group (NOBG.SI), are in the running for U.S. grain and energy trader Gavilon, which could be valued at about $5 billion, according to sources familiar with the matter.

First round bids for the company, which is owned by hedge fund manager Dwight Anderson and investors such as billionaire George Soros, were due earlier in March, the sources said.

Sources have previously said that Swiss trader Glencore (GLEN.L) and U.S. based Bunge Ltd (BG.N) had expressed interest in the company before that deadline.

But Glencore's interest in Gavilon has cooled after it agreed to buy Viterra Inc VT.TO, Canada's largest grain handler, in a $6.2 billion deal on Tuesday, according to one of the sources.

Glencore will acquire Viterra and then sell off some parts to Canada's Richardson International and Agrium Inc (AGU.TO).

Several industry sources said Gavilon's two larger U.S. rivals, Archer Daniels Midland (ADM.N) and Cargill, are also unlikely buyers because they would encounter antitrust problems if they were to bid for all of the company.

That could give an advantage to some of the large Asian trading firms vying for the company, especially the Japanese backed by a strong yen.

All the Asian trading firms could not be immediately reached for comment. Glencore and Gavilon declined to comment.

Gavilon is the third-largest grains marketing network in the United States behind ADM and Cargill. The company has a leading fertilizer distribution system, a network of grain storage bins and oil storage facilities in Oklahoma.

A deal for Gavilon would give the Asian trading companies a sizable presence in key U.S. agriculture markets. Aside from its grains marketing network, Gavilon has a large footprint in the U.S. fertilizer market and an energy operation that includes storage tanks in the Cushing, Oklahoma, hub.

Noble's grains and oilseeds operation would benefit from the acquisition because its operations currently focus on South America, Europe and Asia. Marubeni is pursuing global grain sales operations.

Mitsui has pledged to "strengthen the grain business as one of its core business areas." It already owns United Grain Corp, an exporter of corn, soybeans and wheat based in the United States.

Gavilon began exploring a sale and other fund-raising options in January. The company is expected to have around $650 million of earnings before interest, taxes, depreciation and amortization (EBITDA) in 2012, the sources said.

The company is hoping to reach a multiple of 8 times EBITDA in a sale, they said, which would translate to a value of more than $5 billion.

Gavilon has hired Morgan Stanley (MS.N) to advise on the process. The bank declined to comment.

The company, which buys crops from farmers and offers storage and transportation services, suffered alongside many of its peers last year as volatile grain markets sapped trading profits, although it fared better than some.

Gavilon was created just four years ago when hedge fund manager Anderson's Ospraie fund led a $2.8 billion deal to buy the former commodity trading and merchandising operations of ConAgra Foods Inc. But its roots go back 135 years to the Peavey Co, one of the early traders of U.S. grains.

It now boasts over 320 million bushels of licensed storage capacity, one of the biggest fertilizer distribution systems in the world and 7 million barrels of crude oil storage -- plus a large oil, grains and ethanol trading desk.

It has 2,000 employees and had $15.6 billion of revenue in the fiscal year ended September 2011, according to Moody's.

(Reporting By Michael Erman and Soyoung Kim in New York, Victoria Howley in London, additional reporting by Thomas Polansek in Chicago and Clara Ferreira-Marques in London; Editing by Phil Berlowitz and Tim Dobbyn)

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