Glencore Said Near Sale of Agricultural Unit Stake to CPPIB

  • Terms for 40% stake said to value entire unit at $6 billion
  • An announcement is said to be possible within the week

Glencore Plc is nearing a deal to sell a minority stake in its agricultural business to Canada Pension Plan Investment Board that would value the whole business at about $6 billion, a person with knowledge of the matter said.

Canadian Pension, the country’s largest pension fund, is in talks to acquire a 40 percent stake in the unit for about $2.4 billion, said the person, who asked not to be identified because the information is private. A transaction could be announced within days, the person said. Citigroup Inc. estimated in September that the entire unit was worth $10.5 billion.

The sale is part of a companywide debt-cutting program that Glencore Chief Executive Officer Ivan Glasenberg announced in September. The Swiss commodities trader and miner has said it’s seeking to complete the sale in the first half. Canada Pension was vying with the state-owned Saudi Agricultural and Livestock Investment Co. in the final stages of bidding, people familiar with the matter said last month.

Glencore is among the top three agricultural exporters in Russia, the European Union, Canada and Australia. It became a major agriculture player when it agreed to buy Canadian grain handler Viterra Inc. for C$6.1 billion ($4.6 billion) in 2012.

The company has scrapped its dividend, closed mines and sold $2.5 billion of shares to help it weather a collapse in commodities prices. After reporting a 69 percent drop in annual profit last month, the company pledged to bring its net debt as low as $17 billion, $1 billion less than previously targeted, and to raise as much as $5 billion from selling assets.

Glencore shares, after tumbling 70 percent last year, have jumped 57 percent this year as prices for metals like copper have recovered. The stock dropped 5.3 percent to 141.85 pence in London trading on Tuesday.

Representatives for Glencore and Canada Pension declined to comment. The Wall Street Journal previously reported that Glencore was near a deal to sell a stake in its agricultural business to Canada Pension.

Peter Grauer, chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.

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