February 29, 2024

DealBook: Marubeni of Japan to Buy Gavilon for $3.6 Billion

The Gavilon Grain dock at the Port of Duluth-Superior in Superior, Wis., in January.Ariana Lindquist/Bloomberg NewsThe Gavilon Grain dock at the Port of Duluth-Superior in Superior, Wis., in January.

TOKYO — Marubeni, the Japanese trading house, said on Tuesday that it would buy the American grain merchant Gavilon Group for $3.6 billion, as it looks to ship American agricultural products to fast-growing Asian markets.

Buoyed by a strong yen, Japanese companies have been spending billions of dollars in recent years to secure access to resources like minerals and natural gas, activity that has helped fuel a global commodities boom.

The Gavilon acquisition would allow Marubeni to become a top global player in grains, handling over 55 million tons annually, according to a statement from the Japanese company. The deal for Gavilon would also give Tokyo-based Marubeni far greater control of supply and distribution in the United States, the world’s largest agricultural exporter.

“As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand,” Greg Heckman, president and chief executive of Gavilon, said in a statement.

Gavilon, based in Omaha, Neb., is the third-biggest grain distributor and trader in the United States, behind Archer Daniels Midland and Cargill. The company has been expanding its global presence, acquiring the DeBruce Companies in 2011 to bolster assets in the United States and Mexico. In a separate statement, Orascom Construction Industries of Egypt said it was selling its 16.8 percent stake in Gavilon to Marubeni for $605 million.

With Gavilon, Marubeni gains critical exposure to American agriculture market, securing supplies for its home market.

Japan is the largest grain importer in the world, relying on imports for 60 percent of its food in terms of calories.

Marubeni also hopes to position itself to supply growing demand in Asia, especially in China. As it continues to industrialize, China also faces shrinking farmland and other production constraints.

“We expect world grain trade volume to continue to grow on the back of robust demand in China and other emerging countries,” Marubeni said in a statement.

Article source: http://dealbook.nytimes.com/2012/05/29/marubeni-of-japan-to-buy-gavilon-for-3-6-billion/?partner=rss&emc=rss

DealBook: Japanese Firms to Pay $7.3 Billion for R.B.S. Aircraft Leasing Unit

Tomohiro Ohsumi/Bloomberg News

7:20 p.m. | Updated

LONDON — Japanese bidders led by the Sumitomo Mitsui Financial Group agreed on Tuesday to acquire the Royal Bank of Scotland’s aircraft leasing business for $7.3 billion — the biggest divestiture yet by the British bank since it was bailed out three years ago.

R.B.S. had been trying to sell the unit for months, and the final bidders included Wells Fargo and China Development Bank, according to a person with knowledge of the matter. The person spoke on condition of anonymity because bidders in the auction were not supposed to be disclosed.

Sumitomo Mitsui Financial, the group holding company, together with the trading company Sumitomo Corporation, a joint venture partly owned by Sumitomo Mitsui, said R.B.S. Aviation Capital’s operations would be merged with their own joint leasing business, the S.M.F.L. Aircraft Capital Corporation.

The Japanese companies said in a statement that the deal would allow them to “further expand and develop the business in Asia,” which has seen a proliferation of so-called low cost carriers in recent years, as well as in other emerging markets.

International passenger demand in the Asia-Pacific region is expected to grow 7.6 percent by 2014, according to the International Air Transport Association, an industry group. Passenger demand in North America is expected to increase 4.9 percent in the same period.

The Japanese companies “are increasing their involvement in the aircraft financing business by taking advantage of an opportunity when the market is depressed,” said Paul Sheridan, head of Asia consultancy at aerospace advisory firm Ascend in Hong Kong, who has previously worked for R.B.S. Aviation Capital . “The R.B.S. portfolio is one of the best in the market. Everyone is looking to Asia for future growth.”

R.B.S. Aviation Capital, based in Dublin, owns, manages or has orders for 329 commercial aircraft, according to R.B.S.

Under the terms of the deal, Sumitomo Mitsui Financial will own approximately 60 to 70 percent of R.B.S. Aviation Capital, while the Sumitomo Corporation will control the remainder. The deal is expected to close by end of the third quarter.

By the close of trading in Tokyo, the share price of both Sumitomo Mitsui Financial and the Sumitomo Corporation had risen about 1 percent. By midday in London, R.B.S.’s stock price was up almost 4 percent.

The sale of the aircraft leasing unit is part of a move by R.B.S. to reduce its business operations and shed so-called noncore assets. The British government holds an 82 percent stake in R.B.S. as a result of bailouts in 2008 and 2009.

The bank said it would use the proceeds of the transaction to strengthen its core Tier 1 ratio, a measure of a bank’s ability to weather financial shocks, and to reduce its reliance on the wholesale financing markets. At the end of the third quarter of 2011, that ratio stood at 11.3 percent.

Bruce Van Saun, the R.B.S. group finance director, said in a statement that the deal illustrated “our progress in reducing our noncore portfolio and returning the group to a position of strength.”

Last week, the bank, based in Edinburgh, said it planned to eliminate 3,500 jobs in its investment banking division over the next three years in response to volatility in global financial markets.

R.B.S. already had eliminated 2,000 jobs in that unit in the second half of 2011, according to a company statement. The bank has shed more than 30,000 employees since 2008.

The bank also announced plans to revamp its wholesale banking division, as well as seek buyers for unprofitable operations.

R.B.S. has cut its balance sheet by approximately £600 billion ($922 billion) since 2008, and reduced noncore assets to less than £100 billion. That figure stood at £258 billion in September 2009.

Along with the sale of traditional loan portfolios, the bank has also been selling assets not traditionally associated with a financial institution.

R.B.S. announced in September that it had sold the five-star Hilton Hotel in Glasgow to the Topland Group for £35.7 million. In January 2011, the bank sold the Priory Group, an operator of long-term-care homes and addiction clinics, to the private equity firm Advent International in a deal worth £925 million.

Goldman Sachs and the law firm Clifford Chance advised R.B.S. on the deal. Barclays Capital, Sumitomo Mitsui Financial’s investment banking unit Nikko, as well as the law firm Milbank Tweed, advised Sumitomo Mitsui Financial.

Article source: http://dealbook.nytimes.com/2012/01/17/japanese-firms-to-pay-7-3-billion-for-r-b-s-aircraft-leasing-unit/?partner=rss&emc=rss

Michael Woodford Accuses Olympus of Wrongdoing

The executive, Michael C. Woodford, on Monday delivered a dossier of what he called “condemning” evidence on Olympus to Britain’s Serious Fraud Office in London.

Mr. Woodford, 51, said he had confronted the Olympus chairman, Tsuyoshi Kikukawa, in Tokyo last week with a report he had commissioned from the accounting firm PricewaterhouseCoopers.

The report, he said, raised questions about almost $700 million Olympus had paid to financial advisers over the acquisition of a British medical technology company in 2008.

The PricewaterhouseCoopers report says that improper conduct could not be ruled out.

Mr. Woodford said that he had demanded Mr. Kikukawa’s resignation, only to have the chairman convene a board meeting in Tokyo on Friday in which Mr. Woodford, the only non-Japanese executive among the 15 directors, was fired. Mr. Woodford said the entire board had known about the PricewaterhouseCoopers report but had not taken action.

“Olympus needs a complete and utter forensics accounting,” Mr. Woodford said Monday during a telephone interview from London. “I’d be delighted to return and put in a new management structure,” he said. “But with or without me, the board should all go.”

Olympus denied any wrongdoing and declined to make Mr. Kikukawa available for an interview.

Mr. Woodford, a 30-year Olympus veteran, had been president since April and had been given the chief executive’s post only in September.

Separate from the transaction covered in the PricewaterhouseCoopers report, Mr. Woodford said he had also made inquiries into Olympus’s acquisition in 2008 of three small Japanese companies unrelated to Olympus’s core businesses for almost $600 million. Those investments, which were not covered in the accounting firm’s report, were written down to only a quarter of their value within the same fiscal year, he said.

In all, Mr. Woodford said, the transactions he is questioning resulted in the destruction of $1.3 billion in shareholder value at Olympus, a maker of cameras and medical equipment. The transactions, he said, occurred under Mr. Kikukawa, who preceded him as chief executive before becoming chairman.

“To be that incompetent is difficult to imagine, which suggests that there is something more sinister going on,” Mr. Woodford said.

Yoshiaki Yamada, a spokesman in Tokyo for Olympus, maintained Monday that Mr. Woodford had been stripped of his title because his leadership style had created “a big gap” with the rest of management, which was “inhibiting decision-making.”

“All of our mergers and acquisitions have been carried out with proper accounting, and through appropriate procedures and processes,” Mr. Yamada said.

He could not confirm a report, by Reuters, that Olympus was considering legal action against Mr. Woodford for disclosing confidential company information to the news media. Mr. Woodford’s allegations were first reported by The Financial Times.

Since Mr. Woodford’s dismissal on Friday, Olympus has lost more than $3 billion in market capitalization. The stock sank 22 percent in Tokyo on Monday after losing 18 percent on Friday, when the company fired Mr. Woodford.

Mr. Woodford said the transactions first came to his attention in late July, when an article in the Japanese finance magazine Facta raised questions about Olympus’s acquisition of the three Japanese companies. But when Mr. Woodford asked Mr. Kikukawa about the article over lunch in early August, he said the chairman told him it was “a domestic situation” that the Briton need not worry about.

Two weeks ago, Mr. Woodford said he commissioned PricewaterhouseCoopers to examine the 2008 purchase of the British medical technology firm, Gyrus. Mr. Woodford said he sent a copy of the accounting firm’s report to Mr. Kikukawa last week, along with a letter in which Mr. Woodford called the transactions “shameful” and called for the resignations of the chairman and two other executives.

He said he also sent the report to all members of the Olympus board and suggested to Mr. Kikukawa that they meet Friday to discuss “where we go from here.”

But on Friday morning, Mr. Kikukawa held an emergency board meeting, where Mr. Woodford said he was not allowed to speak. His dismissal came despite Olympus’s public praise of Mr. Woodford this year for his turnaround of its European arm.

Article source: http://feeds.nytimes.com/click.phdo?i=5dd9ef1bb51675031074736e612d32a3