The Chinese Commerce Ministry conditionally approved Marubeni Corp.'s plan to purchase the U.S. grains processor Gavilon Group LLC, according to a source involved in the deal, moving the $5.6 billion combination closer to finalization.
Chinese approval is contingent upon certain conditions that Marubeni itself proposed, the source added, meaning that the merger is likely to have a speedy resolution. One such condition, according to the Financial Times, was that Marubeni and Gavilon sell soybeans separately on the Chinese market for a period of time.
Marubeni, the large Japanese commodities trader, first announced plans to buy Gavilon, the U.S.'s third-biggest grains company, last May for $3.6 billion, plus the assumption of $2 billion in debt. At the time, the Japanese buyer expected to close the deal in September, but delays in the Chinese approval process — necessitated by Marubeni's significant presence in the Chinese market — delayed the process for months.
Other mergers, including the proposed $46 billion purchase of miner Xstrata by the commodities giant Glencore International, have faced similar setbacks (although the Glencore deal received conditional Chinese approval on April 15).
The deal's expected closure is a win for Gavilon's owners, a consortium of private investors that includes a unit of the commodities hedge fund Ospraie Management, the private-equity firm General Atlantic, and an arm of George Soros's hedge-fund company, Soros Fund Management. Those investors purchased Gavilon, once the grains-trading arm of ConAgra Foods, for $2.8 billion in 2008.