Canada Pension Buys Glencore Agriculture Unit for $2.5 Billion

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The Canada Pension Plan Investment Board (CPPIB) this week entered an agreement to buy 40 percent of Glencore’s agricultural unit.

Glencore is a commodity trading and mining company.

More from Reuters:

The sale values the agricultural unit as a whole at close to the initially expected $10 billion, including $0.6 billion in debt and $2.5 billion in inventories, and comes after Glencore said last month it was stepping up its debt reduction plan by unloading more assets.

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The purchase is by the pension fund’s investment unit, Canada Pension Plan Investment Board (CPPIB), which seeks long-term low-risk investments.

“Glencore Agri complements our existing portfolio of agriculture assets, bringing global exposure, scale and diversification,” CPPIB’s global head of private investments, Mark Jenkins, said in a statement

Glencore expects the agriculture deal to complete in the second half of 2016. The business comprises more than 200 storage facilities globally, 31 processing facilities and 23 ports, allowing Glencore to trade grains, oilseeds, rice, sugar and cotton.

It generated core earnings of $524 million in 2015 and had gross assets of more than $10 billion.

Under the agreement, Glencore has the right to sell up to a further 20 percent stake. Glencore and CPPIB may also call for an initial public offering of Glencore Agri after eight years from the date of completion, the companies said.

CPPIB managed $282.6 billion (CAD) in assets as of late 2015.

 

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