9 June 2016
Glencore plc (“Glencore’’) is pleased to announce that it has entered into a definitive agreement with British Columbia Investment Management Corporation (“bcIMC”) for the purchase of a 9.99% stake in Glencore Agricultural Products (“Glencore Agri” or the “Business”) for an aggregate consideration of US$624.9 million payable in cash upon closing.
The transaction values 100% of the equity in Glencore Agri at US$6.25 billion, after taking into account indebtedness that the Business is anticipated to have at closing. This transaction is in addition to the sale of a 40% stake in Glencore Agri to Canada Pension Plan Investment Board for US$2.5 billion, which was announced on 6 April (prior announcement set out below). Glencore will then hold a 50.01% stake and the Business will continue to be run by the existing management team.
bcIMC will be able to appoint one director to the board of Glencore Agri and will be granted certain reserved matter rights consistent with its shareholding. All the other details contained in the 6 April announcement will continue to apply.
It is also anticipated that at closing of this transaction all of Glencore Agri’s debt (which currently totals approximately US$3.6 billion and most of which is currently funded by Glencore) will be assumed by Glencore Agri. It is expected that this financing, currently comprising around US$0.6 billion of long term debt and US$3 billion of short term debt for financing of working capital, will ultimately be funded by Glencore Agri without recourse to Glencore.
This transaction is subject to customary regulatory approvals and closing conditions and is expected to close during the second half of 2016.
The US$3.124 billion of cash proceeds from these two transactions will be used by Glencore to reduce net indebtedness. As a result of the two Glencore Agri transactions and the sale of Komarovskoe for US$100 million, this year Glencore has entered into definitive agreements on asset disposals totalling US$3.2 billion of its US$4-5 billion target for 2016.
Commenting on this transaction, Ivan Glasenberg, CEO of Glencore, said:
“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. We are very excited that Glencore, as the largest shareholder in the business, will benefit from continued growth of the Business with our new partners.”
Commenting on this transaction, Lincoln Webb, Senior Vice President, Infrastructure & Renewable Resources of bcIMC, said:
"Our investment in Glencore Agri provides an excellent opportunity for bcIMC to increase and diversify our exposure within the agricultural space, a sector we view as critical to supporting rising levels of global prosperity. Investing with strong partners and alongside a world-class management team, we believe our long-term investment views and global perspectives align well with the further growth and development of a leading agricultural platform."
Barclays, Citi and Credit Suisse acted as joint financial advisers to Glencore. Linklaters LLP provided legal advice to Glencore.
For further information please contact:
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Notes for Editors
Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group's operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities.
With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 160,000 people, including contractors.
Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.