Acquiring Gavilon could also help the trading house challenge Archer Daniels Midland as the biggest supplier of grains and oilseeds from the United States to China.

"This acquisition supports an ongoing strategic plan by Asian grain importers to better secure future grain needs via the merger and acquisition process," said grains analyst Mike Zuzolo of Global Commodity Analytics.

"Realizing that better supply-chain management should better prepare these importers in their global sourcing needs."

The announcement confirmed an earlier Reuters report.

Japan's trading houses, or "sogo shosha," have been scooping up assets around the world, targeting everything from shale gas to copper, as the world's third-largest economy competes with China, the second-biggest, for resources.

Marubeni, Japan's fifth-largest trading company, had been in advanced talks to buy Gavilon since early May. Gavilon is the largest transaction in Marubeni's history, the company said.

The U.S. grain trader has about $2 billion in debt, Marubeni said, which would take the total value of the transaction to $5.6 billion. The acquisition would be partly financed by bank borrowing, the Japanese firm added.

Gavilon is the third-biggest U.S. grain merchant in terms of the size of its marketing network, behind Archer Daniels and Cargill, and also has large energy and fertilizer trading assets.

Gavilon now has about 320 million bushels of storage in the U.S. putting it ahead of global grain giants like Bunge Ltd and Louis Dreyfus.

"As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand," Gavilon President and Chief Executive Officer Greg Heckman said in a statement.

Marubeni's acquisition of Gavilon is unlikely to face any pushback from farmers and agricultural businesses, which have long been accustomed to the presence of Japanese grain companies in the United States.

"We anticipate minimal changes to our organization and operations," Heckman said.

GOOD FIT

A combination of Marubeni and Gavilon is seen by analysts as a good commercial fit, marrying Gavilon's presence in the U.S. Central Plains and Midwest with Marubeni's operations in the Pacific Northwest - the shortest U.S. sea route to Asia.

Gavilon's owners include billionaire investor George Soros and hedge fund manager Dwight Anderson.

Gavilon also has a large footprint in the U.S. fertilizer market, an energy operation that includes 7 million barrels of crude oil storage and an oil, grain and ethanol trading unit.

Morgan Stanley is advising the U.S. company on the transaction, Gavilon said. Nomura is advising Marubeni, people involved in the discussions have said.

Marubeni's rivals Mitsui & Co and Mitsubishi Corp had both been seen as potential bidders for Gavilon but decided not to pursue a deal.

Japan's outward bound mergers and acquisitions totaled $25.4 billion, including debt, this year to date, versus $15.1 billion for Chinese overseas purchases, according to ThomsonReuters data.

There were 245 overseas purchases or investments by Japanese companies compared with 101 for those from China.

Large trading houses in Japan have more than doubled overseas acquisitions, investing $7.7 billion so far this year, up from $3.5 billion in the same period in 2011.

U.S. analysts say Marubeni's interest in Gavilon could be driven by a desire to grab a bigger share of the lucrative business of supplying grains to China, the world's top importer of soybeans and a fast-growing buyer of corn.

Marubeni said in 2009 it signed a letter of intent with Sinograin, a Chinese state firm, to "work closely in coming years" to build state reserves and commercial grain supplies.

In the next marketing year that starts in October, the market is expecting a 60 percent jump in China's corn imports to around 8 million tonnes.

In part, the shosha may be betting that Japanese companies can make in-roads where China's state-owned traders fear to tread.

Late last year, Chinese state-owned trading house COFCO said it was seeking acquisitions to secure supplies in the United States, Australia, Russia and South America. But it has not advanced any major purchases, although it has sent teams to various countries for discussions, sources said.

Beijing-backed firms have shied away from attempts at large U.S. takeovers since a political furor scuppered offshore oil driller CNOOC's bid for Unocal seven years ago, analysts say.

Marubeni is already the second-largest exporter of U.S. grains to China, with soybean shipments surging five-fold since 2008, based on data from trade intelligence firm PIERS. Marubeni handled nearly 20 percent of China's soybean imports in 2010, according to its annual report.

Unlike Marubeni, Gavilon has not made deep inroads into China, having exported less than 10,000 tonnes of grains over the past two years, data showed.

Marubeni is the best-established shosha inside the U.S. grain belt. In 2010, it overtook Japan's national federation of farm cooperatives Zen-noh as the biggest Japanese exporter of U.S. grains and oilseeds, according to PIERS data, and accounts for more than a third of all shipments by Japan-based firms.

(Additional reporting by Soyoung Kim in New York, K.T. Arasu in Chicago and Risa Maeda in Tokyo; Editing by Aaron Sheldrick and Alex Richardson)

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