November 6, 2012 / 7:55 AM / 5 years ago

Marubeni says awaits China approval for Gavilon deal

TOKYO (Reuters) - Marubeni Corp (8002.T), which in May sealed a $5.6 billion deal to buy U.S. grain merchant Gavilon, said on Tuesday it’s still waiting for Chinese regulators to approve the deal, but denied tensions between Tokyo and Beijing are causing the holdup.

The transaction, which has now received clearance from U.S. anti-competition authorities, was delayed by at least two months from September due to talks on ownership of an important U.S. west coast export terminal and regulatory reviews, people familiar with the matter told Reuters in August.

Teruo Asada, president of Marubeni, denied media speculation that the recent tension between Japan and China over disputed islands in the East China Sea has delayed the Chinese approval.

“The deal is going ahead. We believe the examination is proceeding in line with how they have usually been considered in the past,” Asada told a media briefing on the trader’s first-half earnings.

The deal, which includes debt of around $2 billion, catapults Marubeni, Japan’s fifth-biggest trading house, into the top ranks of global grain merchants and puts it in pole position to meet rising demand for grains from China.

Asada said it may have to go through further U.S. approvals focusing on the consolidation of U.S. grain storage facilities.

Marubeni’s chief financial officer Yukihiko Matsumura told a news conference last week that the company expects to complete the deal by the end of December or early January.

Almost a quarter of Japanese manufacturers are rethinking their investment plans in China and some may shift future production elsewhere after the spike in tensions between Asia’s two largest economies.

    Marubeni is concerned Chinese authorities will be slow to consider the purchase of Gavilon, the Nikkei newspaper reported on Tuesday.

    Marubeni will finance the deal, its biggest acquisition, half by cash and half through bank borrowing, Matsumura had said.

    Marubeni last week slashed its annual net profit forecast for the food business by 40 percent to 13.5 billion yen ($168 million) as a decline in margins in wheat trading due to the U.S. drought this summer cut profitability.

    Asada said he expects margins to improve in the second half following an expected recovery in wheat prices. ($1 = 80.1750 Japanese yen)

    Reporting by Yuko Inoue; Editing by Aaron Sheldrick and Muralikumar Anantharaman

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