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Glencore sells 40% of Glencore Agri to CPPIB for $2.5 billion

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Staff writer ▼ | April 6, 2016
Glencore has entered into a definitive agreement with Canada Pension Plan Investment Board (CPPIB) for the purchase by a wholly owned subsidiary of CPPIB of a 40% equity interest in Glencore Agricultural Products for $2.5 billion in cash.
Acquisition   Glencore Agricultural Products to be sold
The transaction values 100% of the equity in Glencore Agri at $6.25 billion. As at December 31, 2015, the business had long-term debt of $0.6 billion and working capital (net of cash) of $3.0 billion (including readily marketable inventories of $2.5 billion) which it intends to finance with short term debt on closing.

The transaction is subject to customary regulatory approvals and closing conditions and is expected to close during the second half of 2016. The proceeds from the transaction will be used by Glencore to reduce net indebtedness.

Glencore Agri is a differentiated and vertically-integrated business focused on the global agricultural products value chain.

Built around a network of high-quality origination and logistics assets, comprising over 200 storage facilities, 31 processing facilities and 23 ports in strategic locations around the world, Glencore Agri is well-positioned in key export regions and in the trade of major agricultural commodities including grains, oilseeds products, rice, sugar, pulses and cotton.

In the year to December 31, 2015, Glencore Agri reported earnings before interest and tax of $524 million, and at December 31, 2015 had gross assets of $10,187 million.

Upon closing, Glencore Agri will be governed by its own board of directors. CPPIB shall have the right to appoint two directors to the board of Glencore Agri alongside two Glencoreappointed directors and the CEO, Chris Mahoney.

At shareholder meetings Glencore and CPPIB representatives shall vote in proportion to their shareholdings, subject to certain reserved matters.