Marubeni looks to leave energy biz out of Gavilon deal -sources

TOKYO, June 7 Fri Jun 7, 2013 12:06pm EDT

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TOKYO, June 7 (Reuters) - Japanese trading house Marubeni Corp is in advanced talks to leave the energy business of Gavilon out of its planned takeover of the U.S. agriculture merchant, two sources with direct knowledge of the deal said on Friday.

Marubeni is working on acquiring Gavilon's core agriculture-focused business in a deal that would propel it into the top ranks of global grain sellers and allow it to tap rising Chinese grains demand.

"The interest was always in the grains, not the oil," one source with direct knowledge said, speaking on condition of anonymity.

A Marubeni official declined to comment when asked about the plan to split the U.S. company.

Marubeni said when it announced the deal last year it had no plans to sell off parts of Gavilon's operations, which include a mid-sized energy trading desk and U.S. crude oil and natural gas storage facilities.

Yet market participants had speculated the company would offload a business not central to its plans, while the Japanese company already has experience trading oil in the United States.

The Gavilon transaction is valued at $5.6 billion, including debt.

Initially, Gavilon was offered as a package deal that included the firm's grains, fertiliser and oil units, the source said, but added that that was no longer the case.

He said the talks could finish up as early as next week.

Japan's fifth-biggest trading house by market value is working to finalise the deal.

China's watchdog conditionally approved it in late April following a lengthy review period that has delayed the closing.

Omaha, Nebraska-based Gavilon's shareholders include investor George Soros, Dwight Anderson's Ospraie hedge fund, and Egypt's Orascom Construction Industries.

Of Gavilon's $17.85 billion in 2011 annual sales, just $390 million came from its energy business. It includes 8.5 million barrels of crude oil storage and facilities to stock more than 10 billion cubic feet of natural gas.

It has more than 4 million barrels of storage capacity at Cushing, Oklahoma.

Adding to the cost of the deal, the Japanese yen has weakened 20 percent against the dollar since it was announced in May 2012.

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