Freshfields Bruckhaus Deringer and Linklaters are advising on Glencore’s $2.5bn sale of a 40% stake in Glencore Agricultural Products to Canada’s largest pension fund, the Canada Pension Plan Investment Board (CPPIB).
Linklaters advised Glencore with a team led by corporate partner David Avery-Gee, while Freshfields corporate partners David Higgins and Richard Thexton advised CPPIB. Amsterdam managing partner Winfred Knibbeler also advised on the deal for Freshfields.
With the deal having been in the pipeline since last year, the 40% stake values the agricultural business at around $6bn and the sale proceeds will be used to reduce Glencore’s $30bn debt pile. The miner and commodities trader has suffered from a dramatic fall in share value over the past year amid the collapse in world commodity prices linked to China’s economic slowdown.
Glencore and CPPIB have also agreed to an initial four year lock-up period, subject to a carve-out, for Glencore to sell up to a further 20% stake in the business. As well as customary exit provisions, including a right of first refusal, each of Glencore and CPPIB may call for an initial public offering of Glencore Agri after eight years of closing.
Last September Glencore gifted Linklaters with an advisory role on cutting $10.2bn of debt, with corporate heavyweight Charlie Jacobs, who handles the firm’s relationship with Glencore, selected to advise.
Freshfields, meanwhile, previously advised its longstanding client CPPID on its $250m investment in Markit group, another deal on which where Higgins also led. However, Glencore did instruct Freshfields itself last month to sue Colombia over claims the government sought to revoke parts of a coal mining licence.
On the deal, Glencore Agri chief executive Chris Mahoney said: ‘With the investment potential created by this partnership, and given the existing network of high-quality origination, logistics and port assets in key export regions, the business is now well-placed to take advantage of the significant opportunities that are expected to emerge across the sector in the coming years.’