Glencore International Plc yesterday struck a deal to sell a 9.99-per cent stake in its agricultural business to British Columbia Investment Management Corp (bcIMC) for $624.9 million, as part of its plan to sell up to $5 billion worth of assets this year in order to reduce debt.
The move comes two months after the Anglo–Swiss multinational commodity trading and mining company agreed to sell a 40-per cent stake in Glencore Agricultural Products (Glencore Agri) to Canada Pension Plan Investment Board, for $2.5 billion.
Post closing of both transactions, Glencore will hold a 50.01-per cent stake and Glencore Agri will continue to be run by the existing management team.
The transaction values Glencore Agri at $6.25 billion including debt.
The deal will allow bcIMC to appoint one director to the board of Glencore Agri and will be granted certain reserved matter rights consistent with its shareholding.
''We are pleased to welcome another long-term partner into Glencore Agri who shares our vision to capture the significant opportunities we believe will emerge for Glencore Agri over coming years. These transactions highlight the superior value of Glencore Agri, with its advantaged asset footprint and business model, relative to its closest peers, said, Ivan Glasenberg, CEO of Glencore.
The sale of Glencore Agri stakes and an agreement to sell a gold deposit in Kazakhstan for $100 million has taken the total asset disposals this year by Glencore to $3.2 billion and is close to its $4-5 billion target for 2016 as it seeks to cut net debt to between $17 billion and $18 billion this year.
Glencore Agri is a vertically-integrated business focused on the global agricultural products value chain.
It has 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.
It trades in 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 $524 million, and at 31 December 2015 had gross assets of $10,187 million.