Glencore confirmed as Viterra’s six billion dollar suitor

Posted
OLYMPUS DIGITAL CAMERA

The swinging bachelor days appear to be over for Canada’s largest grain handler.

The board of directors and the largest shareholder of Viterra have thrown their support behind what they now confirm is a $6.1 billion takeover bid by multinational grains, metals and energy firm Glencore, in tandem with fertilizer and ag retail giant Agrium and Canada’s second-largest grain handler, Richardson International.

Glencore has proposed an all-cash takeover bid worth $16.25 per share, after which it will sell most of Viterra’s retail agri-products business, plus Viterra’s 34 per cent stake in Canadian Fertilizer Ltd., to Calgary-based Agrium for $1.8 billion cash.

Winnipeg-based Richardson will buy 23 per cent of Viterra’s Prairie grain handling assets, plus “certain processing assets” and the remainder of Viterra’s Prairie retail business, for $800 million cash.

“Viterra employees created a world-class agri-business, of which I am very proud,” Viterra CEO Mayo Schmidt said in a release Tuesday morning. The deal with Glencore, Agrium and Richardson, he said, “creates value and opportunities for employees, our communities, farmers and customers in all the markets we serve.”

Glencore and Viterra said they expect the deals with Agrium and Richardson to create “a more robust competitive landscape for Canadian farmers,” in which Glencore said it intends to grant third party access to its handling infrastructure at “prevailing market rates.”

Agrium, whose ag retail arm was formed largely through its 2008 takeover of Colorado-based UAP and its 2010 takeover of AWB in Australia, said buying Viterra’s retail assets on the Prairies “will provide growth in a market where we currently have a limited retail presence.”

The deal will also see Viterra’s executive offices — many of which have shuffled to Calgary in recent years — consolidated in Regina, where Glencore pledged to make the Viterra head office the platform for its North American agribusiness. The Regina office will also be the base for Glencore’s plans to expand into the U.S.

Glencore, based at Baar, Switzerland, said it also expects to “grow the Canadian business and anticipates ongoing investment in the Canadian operations.”

Viterra’s current commitments to wheat research, global food security initiatives, funding for Prairie agricultural and educational institutions, community development and various charities will continue, Glencore said.