Glencore Said to Study Sale of Australia Malt Unit Joe WhiteBrett Foley
Glencore International Plc, the largest publicly traded commodity supplier, is considering a sale of its Australian malt unit and is working with Bank of America Corp., said two people with knowledge of the matter.
The Joe White Maltings division, the biggest producer of the grain in Australia, may draw interest from agricultural companies including Ridley Corp. as well as brewers and private equity firms, one of the people said, asking not to be identified as the process is confidential. Glencore bought Joe White as part of its C$6.1 billion ($5.9 billion) purchase of Canada’s Viterra Inc. last year.
The Swiss trading company, led by Chief Executive Officer Ivan Glasenberg, is trimming assets after expanding through acquisitions such as the proposed $35 billion all-share takeover of Xstrata Plc. Malting barley futures have dropped 7.3 percent in the past year on NYSE Liffe in Paris.
“This is a business that Glencore has always been pretty clear would be potentially seen as non-core within Viterra,” Jeff Largey, a mining analyst at Macquarie Group Ltd. in London, said today by phone. “The Viterra acquisition was really about the grain handling and how that enhances Glencore’s agricultural trading business.”
A spokesman for Baar, Switzerland-based Glencore declined to comment. Representatives for Viterra and Bank of America said they couldn’t immediately comment, while Ridley CEO John Murray wasn’t available, his assistant said.
Ridley, based in Melbourne, provides rural services and owns stockfeed mills that produce animal feed, according to its website. In November, it agreed to sell most of its Cheetham Salt Ltd. unit to billionaire Li Ka-shing’s CK Life Sciences International (Holdings) Inc. for A$150 million ($155 million). Ridley had A$517 million of assets as of June 30, data compiled by Bloomberg show.
Viterra obtained the malt unit in 2009 as part of its A$1.6 billion purchase of ABB Grain Ltd., Australia’s largest barley exporter. Joe White produces more than 550,000 metric tons of malt a year from seven plants, according to its website. Customers include brewers in Singapore, Japan, Thailand, Vietnam, South Korea and Indonesia.
Malt, a form of barley, is used to brew alcoholic drinks such as beer and whiskey. Australia accounts for about 32 percent of the world’s malting barley trade, according to Barley Australia. The country produces more than 850,000 tons of malt annually, with more than 500,000 tons exported, according to the group’s website.
Glencore is seeking to shed unwanted assets acquired as part of the takeover of Viterra, which was completed in December. It’s agreed to deals with Agrium Inc. and Richardson International Ltd. for parts of the Viterra business for about C$2.6 billion.
The sale of the various Canadian handling assets to Richardson is expected to be completed this quarter. The disposal of an agricultural-products business in Canada and Australia to Agrium is likely to complete next quarter, Glencore’s director of agricultural products Chris Mahoney said this month.
An auction process for the sale of other so-called “non-core assets” had started with sales likely to be completed this year, he said.
The potential sale of the malt unit “is just one example of Glencore combing through their portfolio and focusing on what they view as core,” Macquarie’s Largey said. “It’s probably something, when we think about the next step with Xstrata, where those opportunities get even larger.”
Glencore rose 0.3 percent to 389.05 pence by the close in London.