May 6, 2016

By GAI News staff

Glencore is reportedly in the midst of negotiations to sell a further 9.9% stake in its agri unit according to Reuters. Unnamed sources revealed that Glencore is conducting talks with parties that were outbid by the Canada Pension Plan Investment Board (CPPIB) that recently acquired a 40% stake in the unit for $2.5 billion. These bidders include Saudi Agricultural and Livestock Investment Co. (SALIC), another Canadian pension fund, and Qatar’s sovereign wealth fund.

Given this valuation, the total value of the unit including inventories and debt is approximately $10 billion, and the value of a 9.9% stake would be $625 million.

“Negotiations are ongoing,” one source told Reuters, “…people who lost out are still trying to get on board, but Glencore will struggle to get more money for it.” Another possible challenge that may hinder the sale is the question of whether the new minority stakeholder will be granted voting rights just as CPPIB was under the terms of its acquisition, according to the sources.

Glencore originally announced in September of last year its intent to sell a minority stake in its agricultural unit as part of its plan to reduce its $30 billion debt load by $10 billion. This plan has since been revised to allow for a reduction in debt of between $17 billion and $18 billion by the end of 2016.