AWB and Gavilon Sign Memorandum of Understanding Regarding Commodities Management

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AWB Limited and Gavilon LLC today announced they have signed a non-binding Memorandum of Understanding (MoU) regarding the sale of AWB Geneva and the formation of a 50:50 joint venture of the AWB Australian Commodity Management business. The MoU is subject to a number of conditions including completion of due diligence and negotiation of all transaction documentation.

 

AWB Managing Director Gordon Davis said the signing of the MoU paves the way for the transaction to be completed by June 2010, and AWB has agreed to work exclusively with Gavilon during that period.

 

“The consideration for the transaction will be formulated on the basis of book value plus a premium and is expected to release significant capital for AWB,” Mr. Davis said.

 

“By partnering with a significant global commodities company in Gavilon, the proposed transaction will improve the value proposition to Australian producers and our domestic and international customers as well as enhance the competitive position of AWB’s Commodities Management activity.

 

“The Australian commodities partnership will provide a platform for further growth and ensures the AWB brand remains as it continues to have a strong relationship with Australian producers and our customers,” Mr. Davis said.

 

Gavilon’s President and Chief Executive Officer Greg Heckman said the proposed joint venture provides an excellent opportunity for Gavilon to expand its global footprint in a meaningful way with a well-established Australian agribusiness.

 

“The proposed purchase of AWB Geneva along with the joint venture in Australia will strengthen our destination marketing capability and expand our grain origination network to include Australia,” Mr. Heckman said. “We are pleased to be partnering with AWB and look forward to making further investments in infrastructure to enhance and complement this business.”

 

AWB Managing Director Gordon Davis said the proposed transaction aligns with our strategy to create a simpler lower-risk Australian-based regional agribusiness with significant scale, scope and more sustainable earnings. Mr. Davis said that key commercial terms, including price, will be disclosed upon the signing of final transaction documentation.