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.
The deal will also see Glencore further consolidate its existing agribusiness market share in Australia, where Viterra took over ABB Grain in 2009. Glencore said it expects the deal to create "further synergies and efficiencies for the benefit of Australian growers."
The marriage and shedding of assets already has the blessing of Viterra's largest shareholder, Edmonton-based pension and endowment management firm Alberta Investment Management Corp. (AIMCo), which will vote its 16.5 per cent stake in favour of the deal.
AIMCo in November had ripped Viterra's board as "unresponsive and unaligned" and lacking in the "required skills or experience to meet the company's leadership needs as a growing international agribusiness." AIMCo's senior vice-president Brian Gibson later joined Viterra's board.
Glencore's takeover agreement includes provisions for a $185 million break fee for Glencore if Viterra ditches it at the altar for another deal -- and for a reverse break fee of $50 million for Viterra if the deal is blocked for regulatory reasons.
The two companies plan to file their arrangement agreement shortly with Canadian securities regulators and the Australian Securities Exchange.
Glencore also emphasized that the Viterra deal is "separate and distinct" from its proposed all-share merger-of-equals with Swiss mining firm Xstrata. An Xstrata takeover, if completed, will have "no impact" on the Viterra deal, Glencore said.
End of era
The deal, if completed, would write the final chapter in the history of the Prairie grain handling co-operatives whose assets created Viterra: Saskatchewan Wheat Pool, Alberta Wheat Pool, Manitoba Pool Elevators and United Grain Growers.
Viterra was formed in 2007 by the merger of Regina-based SaskPool with Winnipeg's Agricore United, which was formed in 2001 through the merger of Agricore with UGG.
Agricore had formed in 1998 through a merger of Alberta Pool and MPE after the two pools' thwarted takeover bid for UGG the previous year.
SaskPool started life in 1923 as the Saskatchewan Co-operative Wheat Producers, and was renamed Saskatchewan Wheat Pool in 1953. The politically influential SaskPool became a dual farmers' co-operative and publicly traded company in 1996, and expanded into Manitoba and Alberta through its AgPro Grain arm in 1990. It would later shed its co-operative status in the wake of heavy losses and financial restructuring.
UGG was formed in 1917 through a merger of Alberta Farmers' Co-operative Elevator Co. with the Grain Growers' Grain Co., and by 1993 was also publicly traded. Alberta Pool was formed by growers in 1923, followed by the Manitoba pool in 1924.
The Prairie grain co-operatives' publishing assets also led to the creation of Farm Business Communications, operators of this website. FBC began as the publishing arm of UGG, whose farm journals included Grainews, Country Guide and Canadian Cattlemen.
MPE's Manitoba Co-operator joined FBC through the formation of Agricore United, which then sold FBC to Vancouver-based publishing firm Glacier Ventures International in 2003.
Glacier also became owner of SaskPool's farm newspaper, the Western Producer, in 2001, and Farmers' Independent Weekly, formed by ex-Co-operator staff, in 2007. FIW then merged into the Co-operator.