acquisition of Gavilon follows the trend of Japanese
companies looking for assets in the US and Europe. But the
company found the sales unusual auction format
Gavilon, the USs third-largest grain merchandiser, was
owned by three private equity funds, Osparie Special
Opportunities, General Atlantic and Soros Fund Management. The
funds acquired Gavilon in 2008 from ConAgra Foods for $2.8
billion. Marubeni agreed to pay $3.6 billion for Gavilon in
addition to $2 billion in debt, reflecting approximately a
third of its market capitalisation.
But Marubeni had to reconcile its decision-making process with
the private equity firms format. Nobuhisa Ishizuka, the
Tokyo-based Skadden partner who advised Marubeni in this
transaction, said that it was challenging in terms of seller
expectations, the speed at which private equity funds like to
move and all the financial considerations around the
Ishizuka added that cultural considerations played a part.
Marubeni is a smart and experienced company and there
were very skilled legal and business teams on this deal,
he said. However, they are a Japanese company and have a
very careful and thorough decision-making process that takes
However its timeline had to be meshed with that of the funds,
which were running a competitive process and are used to
dealing with speed and certainty.
Complexities also arose from the differing interests of the
three sellers. The funds were selling the companys
upper-tier structure along with the holding company, so lawyers
had to advise on a number of tax issues. Moreover, Ishizuka
said that the interests of the different private equity funds
were not 100 percent aligned around these issues.
Aside from format-related complications, the transaction was
subject to US regulations. The Dodd-Frank Act, antitrust,
commodities regulations and the Committee of Foreign Investment
in the United States were some of the aspects
The transaction will enable Marubeni to double its
grain-trading capacity and give the company a foothold in the
fertiliser and energy-trading businesses. More importantly, it
will increase its access to the North American supply market,
which will enable it to meet consumer demand, especially in
growing markets like China.
This transaction is emblematic of the trend were
seeing of Japanese companies looking overseas to execute their
global strategies, Ishizuka said.
He predicted the acquisition would not be the only large
acquisition by a Japanese corporate this year. While American
and European corporates reel from the Euro crisis, Ishizuka
expected further M&A activity in the energy, data and
internet technology sectors and anticipates increasing interest
in the consumer and food and beverages space.