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Macquarie to buy Cargill's oil business; traders see logic in deal

Highlights

Australia's Macquarie Group has agreed to buy Cargill's oil business for an undisclosed amount, the companies said Thursday.

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"Cargill Petroleum consists of a very experienced team of oil industry professionals,"said Nick O'Kane, global head of energy markets at Macquarie in a statement put out by both companies. "This acquisition represents an exciting step for our business, bringing greater reach to the Macquarie platform and positioning us for continued growth."

The move expands Macquarie's global footprint in oil trading.

Cargill Petroleum trades both crude and products out of offices in Geneva, Houston, Minneapolis, Shanghai and Singapore. Macquarie's US team works out of Houston.



Cargill, which is US' largest privately held company, will continue to offer financial risk management to the oil industry, petrochemical industry as well as natural gas, power and agriculture and metals. Cargill, whose Minneapolis office is in the middle of the corn belt, will remain active in biofuels, the statement said.

Traders were not surprised by Cargill's exit from US physical crude and product markets markets, they said. Once a powerhouse in these markets, their activity there has been declining.

"Cargill has become less and less active so assume if they can get anything out of it, selling it [the petroleum business] would be good for Cargill," said one US gasoline trader.

Macquarie, on the other hand has been more active in the physical markets and is looking for a place to invest money with good returns, traders said.

"Macquarie just looking for something with return, and they're hoping Cargill can provide it," said one oil trader. "They've been looking for over a year now to get more into crude oil and products trading."

--Janet McGurty, janet.mcgurty@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com