One of two proposed side deals in Glencore’s planned takeover of Canada’s largest grain handler would see the No. 2 handler rise to nearly the same market share.
The other side acquisition, meanwhile, will see one of Canada’s fertilizer giants get a piece of a plant run by a U.S. rival it previously tried to buy, plus a substantially larger piece of the Prairie ag retail market.
Privately-held Richardson International’s share of a $6.1 billion takeover of Viterra includes not only most of Viterra’s agrifood processing assets, but 19 of Viterra’s Prairie grain elevators, a Thunder Bay, Ont. port terminal and a 25 per cent share in the Viterra-owned Cascadia Terminal.
"Following the transaction, Richardson and Glencore-owned Viterra will be similarly sized grain handling companies," Richardson said in a release Tuesday. "Reducing the dominance of a single company should benefit western Canadian farmers through increased choice and competition for their business."
The 19 Prairie elevators Glencore has agreed to sell to Winnipeg-based Richardson include facilities at:
- Assiniboia, Alameda, Carrot River, Davidson, Kindersley, Langenburg, Maple Creek, Melville, Unity and White City, Sask.;
- High Level, Lacombe, Lavoy, Provost and Vulcan, Alta.;
- Arborg and Letellier, Man.; and
- Dawson Creek and Fort St. John in northeastern B.C.
Richardson’s share of a Viterra sale would also include its Can-Oat Milling business with oat processing plants at Portage la Prairie, Man., Martensville, Sask. and Barrhead, Alta.
It would also take over Viterra’s U.S. processing operations, including the 21st Century Grain Processing oat plant at South Sioux City, Neb. and wheat mill at Dawn, Tex.
If the deal is approved as planned, the Viterra staff at all those facilities "will be offered the opportunity to join the Richardson team," Richardson said.
Retail and fertilizer
Calgary-based fertilizer and ag retail firm Agrium, meanwhile, said in a separate release Tuesday that its share of Viterra’s assets, through a separate deal with Glencore, would include "approximately 90 per cent" of Viterra’s 258 agri-products retail locations, plus all 17 of Viterra’s Australian ag retail outlets.
"The acquisition is expected to be immediately accretive upon completion and will provide significant growth for our retail operations, in particular," Agrium CEO Mike Wilson said in the release.
Agrium’s own ag retail presence in Canada has been relatively limited, at 65 outlets.
Ironically, the deal will also see Agrium pick up Viterra’s minority ownership stake in the Canadian Fertilizers Ltd. fertilizer plant at Medicine Hat, Alta.
CFL, which is billed as one of the world’s biggest nitrogen and phosphate fertilizer processing plants, is majority-owned and fully operated by Chicago-based fertilizer giant CF Industries.
Agrium in 2010 conceded defeat in a long-running hostile takeover bid for CF, which fended off Agrium’s advances by way of a separate merger with Sioux City rival Terra Industries.
Richardson on Tuesday valued the Viterra assets it plans to buy at over $900 million, while Agrium, in its release, estimated the acquisition price at about $1.15 billion plus working capital.