Glencore says grain M&A hunt goes on after it passes on several targets

Commodities giant Glencore has made unsuccessful moves for three or four smaller targets in the grain sector this year as it seeks acquisitions to grow upstream, the head of its agricultural arm said. "We have looked at three or four possibilities in our core area already this year but couldn't reach agreement with the seller," Chris Mahoney, chief executive of Glencore Agriculture, told the Global Grain conference in Geneva.
He added, following the presentation, that the attempted takeover targets would have represented relatively small deals. He did not give further details or mention international trader Bunge, for which Glencore made an informal approach this year, a move fanning speculation that the grain trading industry was set for large-scale consolidation. Glencore remained focused on acquisitions for growth, and saw scope for consolidation in the grain sector due to excess capacity, Mahoney said, reiterating comments made at another commodity conference this year.
"Finding value is the big challenge in the industry today," he said. Glencore would concentrate on upstream, export-focused assets such as grain handling and crushing assets, rather than look at downstream activities, he said. "We feel we can capture benefits of strong demand by being strong at origin," said Mahoney. "Origin in our mind lends itself better to big scale and more efficient assets," he added.
Other traders have looked to food processing and specialist ingredient activities to reduce their dependence on traditional grain trading, which has been hit by high supply and low prices. Bunge rebuffed Glencore's approach and later announced a deal to buy a 70 percent stake in Malaysian palm oil producer IOI Loders Croklaan for $946 million.
Bunge is part of the so-called ABCD quartet of global agricultural commodity traders that also includes Archer Daniels Midland, Cargill and Louis Dreyfus. Glencore became a major international grain trader through its 2012 takeover of Canadian based Viterra. Glencore Agriculture was spun off last year when the commodity group sold a 50 percent stake in its agricultural division to two Canadian pension funds. The opening of the capital would give Glencore Agriculture the means to pursue growth by acquisitions, Mahoney said.