Milling & Baking News - May 31, 2011 - (Page 12)

Business  Glencore International raises $10 billion-plus in offering HONG KONG — An initial public offering of Glencore International P.L.C. was completed May 19, raising gross proceeds of more than $10 billion. Under the offering, Glencore, which has a major agricultural trading, storage and processing business, placed 1,137,331,973 ordinary shares at a price of 530 pence (85c) per share and 31,250,000 new ordinary shares to Hong Kong investors at HK$66.53 ($8.56). Glencore estimated the total number of ordinary shares with completion and global third-party supply base, its logistics, risk management and working capital financing capabilities, extensive marketing insight business, optionality, its extensive customer base, strong market position and penetration in most commodities and economies of scale,” the company said. “In contrast, this is not the business model of Glencore’s mainly industrial competitors.” Established in 1974 as Marc Rich + Co. AG, Glencore initially was focused on the physical marketing of metals, minerals and crude oil. The Glencore International P.L.C. EBIT by operating segment* (millions) 2010 Per cent Metals and Minerals ............. $2,561 ..........48% Energy Products ....................... $685 ..........13% Agricultural Products ............... $717 ..........14% Corporate .............................. $1,327 ..........25% Total .................................. $5,290 *Excluding exceptional items of the offering at 6,922,713,511, prior to the exercise of underwriters’ overallotment option. The over-allotment option of up to 116,858,197 shares, equating to 10% of the ordinary shares in the offering, may be sold for 30 days. Following the offering, Glencore estimated its directors and employees retained an 83.1% stake in the company’s ordinary shares. The I.P.O. created a publiclytraded commodities business with a market capitalization of $59.2 billion. By way of comparison, the market capitalization of Bunge Ltd. is about $11 billion; Archer Daniels Midland Co., $20 billion; and The Goldman Sachs Group Inc., $71 billion. Glencore is an integrated producer and marketer of commodities, with activities in metals, minerals, energy products and agricultural products. “As a marketer, Glencore is able to differentiate itself from other production entities as, in addition to focusing on minimizing costs and maximizing operations efficiencies, Glencore focuses on maximizing returns from the entire supply chain, taking into account its extensive 12 / May 31, 2011 Milling & Baking News company acquired Granaria Group, an established Dutch grain trading company, in 1981, forming the basis of Glencore’s Agricultural Products business segment. Beginning in 1987, the company shifted from a pure commoditymarketing company into a diversified natural resources group. The change was made possible through acquisitions in mining, smelting, refining and processing. The company’s name was changed to Glencore International in 1994, with a management buyout of Mr. Rich. The company has been owned by its employees since then. In a discussion of its Agricultural Products segment, Glencore said EBIT before exceptional items was $717 million in 2010, up from $345 million in 2009 and $678 million in 2008. The 2010 figure equated to 14% of the company total EBIT before exceptional items. The company’s agricultural marketing volumes in 2010 were 20.9 million tonnes of grain and 9.4 million tonnes of oilseeds/oil. Overall, the company said it estimated its market share at about 8.7% of addressable market for grains in 2010 with “significant market share in Europe, the C.I.S. and Australia.” The company owns or has a stake in agricultural processing businesses in Argentina, Brazil, the Ukraine, Germany, The Netherlands, Paraguay and other C.I.S. nations. Its largest processing business is Moreno, based in Argentina. The company has annual processing capacity of 1.9 million tonnes of oilseeds. In Argentina, Brazil and Uruguay, Glencore has stakes ranging from 50% to 100% in a variety of wheat flour and rice milling businesses with an aggregate milling capacity of 1.5 million tonnes a year. In Glencore’s larger metals and energy businesses, Glencore estimated its market share at 60% in the world zinc market, 50% in zinc concentrate, 50% in copper, 30% in copper concentrate, 38% in alumina, 22% in aluminum and 23% in cobalt. The company estimated its daily oil sales volume as equating to 3% of world consumption. The company said its geographic diversity is built, in part, on a willingness to invest in areas of the world shunned by other companies. “Glencore believes that its successful track record in this regard has enabled it to gain an effective first-move-advantage in a number of countries with high quality strategic resources,” the company said. “Many of Glencore’s important industrial assets are located in the C.I.S., Central Africa and South America, in which Glencore has been successfully operating for many years.” Glencore shares are being included in the FTSE 100 under the fast entry rule of the London Stock Exchange. The FTSE 100 is an index that includes the 100 largest capitalized companies on the exchange. In the prospectus issued in connection with the offering, Glencore said earnings in 2010 totaled $1,646 million, up from $1,079 million in 2009 and $391 million in 2008. Net proceeds from the offering, estimated by Glencore in the prospectus at $7.5 billion, were expected to be used for three principal purposes: 1 — $2.2 billion to increase its holdings of Kazzinc, a zinc business based in Kazakhstan. 2 — $5 billion for three years of budgeted capital expenditures. 3 — The reduction of the company’s borrowing costs and to improve its financial flexibility. MBN /

Table of Contents for the Digital Edition of Milling & Baking News - May 31, 2011

Milling & Baking News - May 31, 2011
Nutrition and Health - Grain-based foods groups highly critical of proposed ad guidelines
Late News - F.D.A. seeks views on food safety proposals
Business - Floods, tornadoes devastating to regional agriculture
NEWS Comment - Heavy hand of weather lowers wheat outlook
Editorial - Doing well even with relatively small fl our changes
Late News - Tate & Lyle to restart sucralose facility
Late News - I.G.C. cuts wheat production, use forecasts
Late News - New food icon to replace MyPyramid image
Late News - Bunge hikes quarterly dividend 8.7%
Business - Flowers Foods completes cash acquisition of Tasty Baking
Business - Flowers board declares three-for-two stock split
Business - Companies, associations join HFCS lawsuit
Business - Kraft launches Chips Ahoy! Chewy Gooey cookies
Business - Glencore International raises $10 billion-plus in offering
Data - Flour output in January-March smallest in nearly fi ve years
Data - Central states, other areas see decline in quarterly fl our output
Industry Activities - I.A.O.M. creates Southeast Asia District
Signature Interview - Safety expert reviewing BISSC
People - Sarena Lin joins Cargill in corporate strategy position
People - Former Hershey c.e.o. joins San Francisco-based private equity fi rm as operating partner
Ingredient Update - Gluten-free ingredients remain in demand
Washington - Doha: Coping with imbalances
Washington - Agribusiness groups urge Congress to ‘rethink’ C.R.P. in next farm bill
Financial Results - Flowers Foods income up 1% in ‘eventful’ fi rst quarter
Financial Results - Economy, gas prices, weather seen affecting Flowers’ markets
Financial Results - Campbell baking unit earnings and sales rise in quarter
Financial Results - North Dakota Mill posts $6.2 million profi t
Financial Results - Weston Foods operating income falls 55%
Financial Results - Double-digit sales gain boosts Krispy Kreme quarterly net
Industry Activities - W.F.C. names kinnaird+mangan as public relations agency of record
Ingredient Market Trends - House panel targets food programs, food safety for cuts
Ingredient Week
Supplier Innovations
Marketplace Business Network
Ad Index

Milling & Baking News - May 31, 2011