Marubeni Corp. (8002), set to buy Gavilon Group LLC for $3.6 billion, will raise loans to fund half the purchase and sell assets to reduce debt, Barclays Plc. (BARC) and JPMorgan Chase & Co. (JPM) said.
The Japanese trading house will borrow about 140 billion yen ($1.8 billion) and use 150 billion yen of cash to buy the shares of the in Omaha, Nebraska-based U.S. grain merchandiser, Tokyo-based Barclays analysts Kazuhisa Mori and Shogo Umeda said today in a report after a conference call with Marubeni executives yesterday. A Marubeni spokeswoman couldn’t be immediately reached for comment on the report.
Marubeni, whose businesses span Chilean copper mining, oil and textiles, will become the largest grain trader in the U.S. after Archer-Daniels-Midland Co. (ADM) following the deal, according to a presentation from the call posted on Marubeni’s website today. Marubeni will take on $2 billion of debt as part of the acquisition, its biggest.
Marubeni is reviewing the assets that could be sold to cut debt after the Gavilon purchase, JPMorgan analyst Akira Kishimoto said today in a report based on the Marubeni conference call, which was closed to the media.
Gavilon’s earnings before interest, tax, depreciation and amortization are expected to reach $600 million in the fiscal year ending March 31, 2014, Kishimoto said in the report.
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