Japan's Marubeni scales back deal for PE-owned Gavilon

The Japanese conglomerate had originally offered to pay $3.6 billion for a 100% equity stake in May last year, valuing the trader at $5.3 billion including debt.

Marubeni said June 10 that under the revised terms of the acquisition it would pay $2.6 billion in cash for the company with the sellers, which also include hedge fund Ospraie, George Soros and Egypt's Orascom, retaining Gavilon's energy unit. It is not known how much of Gavilon's $2 billion in debt Marubeni will assume under the revised deal.

General Atlantic acquired Gavilon, alongside its co-investors, for $2.8 billion in 2008 when the company was the trading arm of US packaged foods company ConAgra Foods. The investors helped drive growth at the firm through acquisitions such as US grain handler DeBruce.

The transaction still represents Marubeni's largest ever acquisition but is now expected to put less strain on the balance sheet of the group which is the most geared of Japan's "big five" trading companies, with a net debt of around 1.6 times shareholders' equity.

It will increase the annual volume of grain handled by Marubeni - already Japan's largest trader of corn and other grains - from 22 million tons to 55 million tons, comparable to some of the biggest companies in the sector.

Another overseas investment recently made by Marubeni, British wind power engineering firm Seajacks International, has recently announced the launch of its first Asian subsidiary. Innovation Network Corporation of Japan (INCJ) and Marubeni acquired Seajacks from US investment fund Riverstone Holdings in May last year - the same month the Gavilon deal was announced - for around $850 million, each assuming 50% ownership.

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