By James Topham and Emi Emoto
TOKYO, June 7 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
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
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
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
Initially, Gavilon was offered as a package deal that
included the firm's grains, fertiliser and oil units, the source
said, but added 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
Adding to the cost of the deal, the Japanese yen has
weakened 20 percent against the dollar since it was announced in