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Ospraie’s Gavilon Said to Draw Bunge, Glencore as Suitors

Gavilon Group LLC has drawn interest from suitors including Bunge Ltd. and Glencore International Plc as the closely held grain handler weighs a sale that could fetch as much as $5 billion, said people familiar with the matter.

Gavilon is asking for first-round bids in early March, said the people, who declined to be identified as the process is private. The company also may pursue an initial public offering, an option its owners discussed with banks, they said. Gavilon’s top investor is Ospraie Management LLC, the hedge-fund firm founded by Dwight Anderson.

Wilmar International Ltd., Japanese trader Mitsui & Co. and Canadian grain handler Viterra Inc. also are exploring offers, said two of the people. The successful bidder for Gavilon, whose roots go back more than a century, would gain one of the world’s largest fertilizer distribution networks, as well as the third-biggest U.S. grain-merchandising operation, based on the company’s website.

Agricultural products accounted for about $17.1 billion of sales at Glencore, a Swiss-based commodities trader, last year, according to preliminary annual results. White Plains, New York-based Bunge processes soybeans, corn and sugar.

Wilmar, the world’s largest palm oil trader, spoke with Omaha, Nebraska-based Gavilon last year about a purchase without sealing a deal, according to one person. Gavilon is working with Morgan Stanley to review options including a sale, a person familiar with the matter said in January.

Other Options

Most private-equity funds have been excluded from the bidding process, said another person with knowledge of the situation. Spokesmen for Gavilon, Morgan Stanley, Bunge, Glencore, Mitsui and Viterra declined to comment. Wilmar wasn’t immediately able to comment, it said today in an emailed statement.

The company also has discouraged oilseed processor Cargill Inc. and Archer Daniels Midland Co. from bidding after judging those combinations would pose too much antitrust risk, said another person familiar with the matter. ADM, the world’s biggest grain processor, owns a stake in Singapore-based Wilmar. Representatives at ADM and Cargill declined to comment.

Gavilon took its current form when ConAgra Foods Inc. sold its trading and merchandising operations for about $2.75 billion, including debt, to Ospraie, Soros Fund Management LLC and private-equity firm General Atlantic LLC in 2008. Anderson formed Ospraie in 2004 after working with Tudor Investment Management, the Greenwich, Connecticut-based hedge-fund firm run by Paul Tudor Jones.

Gavilon’s Performance

ConAgra had acquired Gavilon predecessor Peavey Co. in 1982. The company has annual earnings before interest, taxes, depreciation and amortization of about $600 million, and could sell for seven to eight times earnings, the people said. Some potential bidders may press for more details about the company than they received in an offering memorandum distributed earlier this year, said one of these people.

The company also runs a large energy-trading business, which would likely trade at a lower valuation than the rest of the operations, said two people working for potential buyers.

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