Japan's marubeni says to buy gavilon for $3.6 billion - Cell Phone Docking Station Manufacturer

Marubeni, Japan's fifth-largest trading company, had been inadvanced talks to buy Gavilon since early May. People familiar with the matter told Reuters previously thatMarubeni had offered to pay around $5.2 billion for Gavilon,including assuming about $1.7 billion of debt the U.S. grain traderhad at the end of December. Acquiring Gavilon would deepen Marubeni's control of grain suppliesfrom North America, the world's top grain export hub. "This acquisition supports an ongoing strategic plan by Asian grainimporters to better secure future grain needs via the merger andacquisition process," said grains analyst Mike Zuzolo of GlobalCommodity Analytics.

"Realizing that better supply-chain managementshould better prepare these importers in their global sourcingneeds." A deal could also help Marubeni challenge Archer Daniels Midland asthe biggest supplier of U.S. grains and oilseeds to China. Gavilon now has about 320 million bushels of storage in the UnitedStates, ranking third behind ADM and Cargill but ahead of globalgrain giants like Bunge Ltd and Louis Dreyfus. Marubeni's acquisition of Gavilon is unlikely to face any pushbackfrom farmers and agricultural businesses, which have long beenaccustomed to the presence of Japanese grain companies in theUnited States.

GOOD FIT A combination of Marubeni and Gavilon is seen by analysts as a goodcommercial fit, marrying Gavilon's presence in the Central Plainsand Midwest with Marubeni's operations in the Pacific Northwest -the shortest U.S. sea route to Asia. Gavilon's owners include billionaire investor George Soros andhedge fund manager Dwight Anderson. Gavilon also has a large footprint in the U.S.

fertilizer market,an energy operation that includes 7 million barrels of crude oilstorage and an oil, grain and ethanol trading unit. Morgan Stanley is advising Gavilon on the transaction, while Nomurais advising Marubeni, people involved in the discussions have said. Marubeni's rival trading houses, or "shosha", Mitsui & Co andMitsubishi Corp had both been seen as potential bidders for Gavilonbut decided not to pursue a deal. U.S.

analysts say Marubeni's interest in Gavilon could be driven bya desire to grab a bigger share of the lucrative business ofsupplying grains to China, the world's top importer of soybeans anda fast-growing buyer of corn. Marubeni said in 2009 it signed a letter of intent with Sinograin,a Chinese state firm, to "work closely in coming years" to buildstate reserves and commercial grain supplies. In the next marketing year that starts in October, the market isexpecting a 60 percent jump in China's corn imports to around 8million tonnes. In part, the shosha may be betting that Japanese companies can makein-roads where China's state-owned traders fear to tread.

Late last year, Chinese state-owned trading house COFCO said it wasseeking acquisitions to secure supplies in the United States,Australia, Russia and South America. But it has not advanced anymajor purchases, although it has sent teams to various countriesfor discussions, sources said. Beijing-backed firms have shied away from attempts at large U.S.takeovers since a political furor scuppered offshore oil drillerCNOOC's bid for Unocal seven years ago, analysts say. Marubeni is already the second-largest exporter of U.S.

grains toChina, with soybean shipments surging five-fold since 2008, basedon data from trade intelligence firm PIERS. Marubeni handled nearly20 percent of China's soybean imports in 2010, according to itsannual report. Unlike Marubeni, Gavilon has not made deep inroads into China,having exported less than 10,000 tonnes of grains over the past twoyears, data showed. Marubeni is the best-established shosha inside the U.S.

grain belt.In 2010, it overtook Japan's national federation of farmcooperatives Zen-noh as the biggest Japanese exporter of U.S.grains and oilseeds, according to PIERS data, and accounts for morethan a third of all shipments by Japan-based firms. (Additional reporting by Soyoung Kim in New York, K.T. Arasu inChicago and Risa Maeda and Yuko Inoue in Tokyo; Writing by KevinKrolicki; Editing by Aaron Sheldrick and Alex Richardson).

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