News Grains & Commodities
Grain giant Glencore strengthens position in US
With the acquisition of Gavilon Group, Glencore Plc Viterra has successfully established itself in the American grain trade. The company is thus trying to take a growing share of commodities trade from the 'ABCD', the big four.
The ABCD is often referred to in international commodities trade. This refers to the companies: Archer-Daniels-Midland, Bunge, Cargill and (Louis) Dreyfus. If it is up to the Swiss Glencore, it will soon be ABCDG. With the takeover of Gavilon Group, the company gains a strong foothold in the United States. Especially in the Midwest, the beating heart for soy and corn cultivation.
$1,13 billion
Glencore has increasingly separated its agricultural arm from the other activities in recent years. It also got a new name: Glencore Plc Viterra or simply Viterra. That is the name of a Canadian trading house that was taken over by the Swiss ten years ago. Gavilon is active in the trade of grains and oilseeds. Not just in the US but in all major areas of the world. The acquisition is worth $1,13 billion.
So far, Viterra has mainly focused on Canada and Australia, but this means that there will be quite a few more work areas. Not unimportant: this also applies to shipping traffic over transhipment facilities. For example, there are two minority interests in two ports on the American west coast. These offer an excellent position for exporting commodities to Asia.
American ambition
The billion dollar deal is a bit special. Analysts assumed that Glencore was in the process of selling its grain business. In the past years, parts were always sold and five years ago the name was transformed into Viterra. The ambitions to also be able to play in the US made no secret of it. For example, in 2017 an attempt was made to take over rival Bunge (unsuccessfully). So now we have managed to buy Gavilon from another rival: Marubeni Corp.
These are golden times for commodity trading companies. Extreme weather conditions, the corona crisis and a huge demand for raw materials are doing them no harm. The financial figures of the ABCD companies all show strong growth. Sometimes even a record. According to Marubeni, the reason for selling a company now has to do with the fact that it can now consolidate and achieve maximum returns.
Not everything sold
In 2013, the Japanese company bought Gavilon for $2,7 billion. It now hopes to earn a total of $3,51 billion from the sale through loans to Glencore, among other things. It does own certain business units, such as grain elevators in the US.
About Glencore Plc Viterra: The company comprises more than 180 storage and transhipment facilities, 26 port terminals, 30 factories, 180 ocean-going vessels and 2.000 rail cars worldwide. In 2019, 80 million tons of agricultural commodities were traded.
Niels van der Boom
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