Castleton Commodities in $1 Billion Deal to Buy Morgan Stanley's Global Oil Merchanting Business

Wednesday May 13, 2015

U.S.-based Castleton Commodities International LLC (CCI) is acquiring Morgan Stanley's Global Oil Merchanting business, CCI announced Monday. 

The physical oil business is one of Wall Street's largest and oldest, according to reports, with the deal estimated to be worth more than $1 billion.

Tom Simpson and Fabrizio Zichichi, who were previously with Morgan Stanley's Global Oil Merchanting business, will stay on to head the new CCI operations.

According to unnamed sources, around 100 front-office staff, including traders and shippers, will also make the transition to CCI, with roughly 200 staff in total. 

"The acquisition of Morgan Stanley's Global Oil Merchanting business is an excellent strategic fit for CCI and it aligns well with our goal of becoming a top-tier, global multi-commodity merchant," said CCI CEO William C. Reed II

"The business is a natural extension of our existing physical oil and products platform and is highly complementary to CCI's strong position in North American power, natural gas and natural gas liquids."

CCI is expected to gain about a dozen oil tank storage leases, along with physical oil supply and purchase contracts.

Morgan Stanley has reportedly said that the deal will not be material.

The bank has also purportedly been trying to sell off the business for years in the face of decreasing profits and increasingly stringent regulatory scrutiny, and is also looking to sell its stake in oil tanker group Heidmar as well, according to a source. 

The deal is subject to regulatory approval and is expected to be closed in the second half of 2015. 

Last month, it was reported that Russia's Rosneft was originally expected to purchase the oil trading business, though plans fell through after the U.S. ramped up sanctions in the wake of Russia's movements in Crimea