Acquisition of Gavilon
May 30, 2012
Agenda 1. Gavilon Overview 2. Gavilon Business Segments 3. Grains 4. Fertilizer 5. Energy
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Acquisition of Gavilon – May 30, 2012
1. Gavilon Overview
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Headquarters:
11 ConAgra Drive, Omaha, Nebraska, USA
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Overview:
US-based, leading grains, fertilizer and energy trader with more than 300 storage facilities and offices worldwide; Gavilon became the third largest grain operation behind ADM and Cargill following the 2011 DeBruce Companies acquisition
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Established:
Private investors formed Gavilon and acquired ConAgra Trade Group in June 2008
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Net Assets:
US$ 1,909 million
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Sales:
US$ 17,852 million
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Equity Holders:
Ospraie Fund and Ospraie Special Opportunities Fund, General Atlantic, Soros Fund Management and Gavilon Management
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Employees:
1,943
Acquisition of Gavilon – May 30, 2012
2. Gavilon Business Segments Grains 2011 Sales Employees
2011 Sales Employees
US$ 17,852 1,943
Risk Control / Risk Management
Fertilizer
Transportation / Logistics
2011 Sales Employees
US$ 2,907 311
Energy 2011 Sales Employees
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US$ 14,555 1,326
US$ 390 124
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Grains: Operates a strategic distribution network with more than 140 grain facilities across North America and the third largest grains storage network in the US with distribution marketing offices in Australia, Ukraine and Brazil
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Fertilizer: Operates one of the largest US wholesale fertilizer networks with 74 storage and handling facilities across the US, Mexico, South America and Africa with storage capacity of 1.2 million tons and handling volume of 6 million tons
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Energy: Operates a trading business mainly dealing in crude oil, natural gas and fuels which is operated through a vast logistics network that includes 8 million barrels of crude oil storage capacity, 10 billion cubic feet of natural gas storage capacity and 500,000 barrels of refined products storage capacity
Acquisition of Gavilon – May 30, 2012
3. Grains Strengths in Grains •
Third largest storage network (8.3 million tons) and over 140 grain facilities in the US
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Major US handler of grain ingredients (wheat products, corn products, DDGS, etc.)
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Operates in key global markets, such as Australia, Ukraine and Brazil
Significance of the Transaction •
Expansion of the platform in the US, which is the largest grain market in the world
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Creating a major grains player, with combined handling volume of more than 55 million tons
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Continued ability to maintain and provide a steady source of grains
Wichita Facility
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852,000 metric tons storage
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363 bins stretching one-half mile
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shuttle loader capability
Acquisition of Gavilon – May 30, 2012
3. Grains – Significance of US Market in Global Grains Trade Grains Demand
Grains Production
(million tons)
(million tons) US
1,200
2,250 2,000
Top 5 exporters after US (Argentina, Australia, Brazil, Canada, Russia)
Rest of World
2011
1,000
2011
1,750 1,500
800
1,250 600 1,000 750
400
500 200 250 0
Note: Includes volumes for corn, wheat, soybean Source: Food and Agricultural Policy Research Institute
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Acquisition of Gavilon – May 30, 2012
0
US
3. Grains – US Grain Majors (Storage Capacity)
12.0
10.4 9.5
10.0
9.0 8.3
8.1
8.0
6.3 6.0
4.0
2.0
0.0 ADM
Marbeni + Gavilon
Source: Grain & Milling Annual 2011
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Acquisition of Gavilon – May 30, 2012
Cargill
Gavilon
Bunge
CHS
3. Grains – Growth Strategy Post-Acquisition •
Establish a competitive global grain network with Gavilon’s North American operations and Marubeni’s global distribution channels
Global Grains Trade Supply Chain Producers
Origination and Supply
Purchase grain and ingredients from farmers, co-ops, processors and other merchants earning origination margin
Transportation and Logistics
Merits of scale when shipping freight (railroad, barge, etc.)
Storage
Store and blend product to meet customer quality requirements and earn elevation, blending, storage and carrying charges
Export Sites
Profit from two export terminals; Columbia Grain – 100% owned by Marubeni; Kalama Export Company – 45% owned by Gavilon
Marketing and Distribution
Customers
Distribute to growing developing world markets and Japan; capture sales margins
Strength in global distribution, especially in China
Strength in origination and supply 8
Acquisition of Gavilon – May 30, 2012
4. Fertilizer Strengths in Fertilizer •
One of the largest fertilizer wholesale networks in the US
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Continuous relationships with more than 1,800 global leading suppliers and customers
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Leveraging its own market intelligence through grains, ingredients and fertilizer markets
Significance of the Transaction •
Building up the fertilizer value chain through collaboration with Helena
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Expansion of the trading and distribution business, and acceleration of fertilizer product manufacturing, including fertilizer raw materials
Jamestown Facility
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38,100 metric tons of dry fertilizer storage
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20,000 short tons of liquid storage complete in June
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Share site with grain facility
Acquisition of Gavilon – May 30, 2012
4. Fertilizer – Growth Strategy Post-Acquisition •
Synergy with Helena – significant North American fertilizer market supplier
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Expansion of fertilizer distribution – international trading / distribution, inter-relationship between grain and fertilizer demand growth Gavilon (Fertilizer)
HELENA
Fertilizer Volume
US (4 million tons), Outside US (2 million tons)
US (2.8 million tons)
2011 Sales
US$ 2.9 billion
US$ 3.7 billion
US Fertilizer Market Supplier
Wholesaler
Retailer
End User
20%(8 mil MT)
Trader owning import terminals
Import 10 mil MT Total 40 mil MT
10
15%(6mil MT) 5%(2 mil MT)
Acquisition of Gavilon – May 30, 2012
Large retailer owning import and domestic river terminals Trader / Whole saler owning import and domestic river terminals
60%(24mil MT)
Small – Mid retailer not owning terminals
Farmer / Co-ops
Domestic (North America) 30 mil MT
5. Energy Strengths in Energy •
Vast logistics network, that includes 8 million barrels of crude oil storage capacity, 10 billion cubic feet of natural gas capacity, and 500,000 barrels of refined products storage capacity
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Sophisticated risk management capability grounded in sound governance structure
Significance of the Energy Business Acquisition and Growth Strategy •
Expansion of our crude oil, refined products, and natural gas trading , marketing and distribution business in North America
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Growth via increased storage assets and further development of stable fee and margin businesses from existing assets
Cushing Facility
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4.14 million barrels of storage capacity
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14,000 barrels per hour of pipeline throughput capacity
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Access to NYMEX delivery point
Acquisition of Gavilon – May 30, 2012
