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Glencore to Sell 40% stake in Agricultural Unit to Canada Pension Plan
Friday 08 April 2016

8 April 2016 - Anglo-Swiss natural resource group Glencore plc (LSE: GLEN) is has agreed to sell a subsidiary of Canada Pension Plan Investment Board a 40% equity interest in Glencore Agricultural Products for an aggregate consideration of USD 2.5bn payable in cash upon closing, the company said.
 
The transaction values 100% of the equity in Glencore Agri at USD 6.25bn.

As at 31 December 2015, the business had long-term debt of USD 0.6bn and working capital (net of cash) of USD 3bn (including readily marketable inventories of USD 2.5bn) 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.

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.

It is 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.

The business is 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 31 December 2015, Glencore Agri reported earnings before interest and tax of USD 524m, and at 31 December 2015 had gross assets of USD 10,187m.
 
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 Glencore-appointed 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.
 
In addition, and consistent with the mutual commitment to a successful long-term partnership, Glencore and CPPIB have agreed to an initial four year lock-up period subject to a carve-out for Glencore to sell up to a further 20% stake.

As well as customary exit provisions, including a right of first refusal, each of Glencore and CPPIB may call for an initial public offering of Glencore Agri after eight years from the date of closing.
 
Barclays, Citi and Credit Suisse acted as joint financial advisers to Glencore. Linklaters LLP provided legal advice to Glencore.
Details
Date Published: 08/04/2016
Target: 40% equity interest in Glencore Agricultural Products
Country: UK
Deal Size: 2.5bn (USD)
Sector: Agriculture/Forestry
Type: Divestment
Financing: Cash
Status: Agreed
Vendor: Glencore plc
Buyer: Canada Pension Plan Investment Board
Buyer Advisor: Barclays , Citi , Credit Suisse
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