Glencore to buy Viterra for C$6.1 billion
March 20, 2012
by Eric Schroeder
BAAR, SWITZERLAND — Glencore International P.L.C., the largest publicly-traded commodity supplier, has agreed to acquire Regina, Sask.-based Viterra Inc. for C$6.1 billion ($6.15 billion).
Under terms of the agreement, Glencore said it will pay C$16.25 a share for all the issued and outstanding shares of Viterra. The transaction price represents a premium of 48% over Viterra’s closing price of C$10.98 on March 8, the day prior to Viterra’s announcement that it had received interest regarding a potential transaction.
“The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets,” said Chris Mahoney, director of agricultural products at Glencore. “This is an exciting opportunity to deliver the real benefits that can be generated through the combination of Glencore’s and Viterra’s respective assets, people and know-how to both farmers and customers in Canada, Australia and further afield.”
Glencore said it is confident the acquisition of Viterra will deliver “significant overall benefits to grain farmers.”
“The transaction will give farmers access to Glencore’s unparalleled global distribution channels and increase their ability to export their product into international grain and oilseeds markets,” the company said. “Glencore’s global reach and expertise will provide farmers with strong protection from market volatility, more options to market their grain and oilseeds and more competitive pricing resulting from Glencore’s wider markets access and its more consistent demand for grains and oilseeds.
“Glencore’s logistics network enables it to deliver grain and oilseeds to more regions more efficiently, and its balance sheet strength enables the company to buy greater volumes. This results in a more consistent demand profile and therefore greater pricing continuity for farmers.”
Glencore said it will consolidate Viterra’s executive offices in Saskatchewan and make the Regina office the platform for its North American agricultural operations and for expansion into the United States.
Additionally, Glencore said it will contribute to wheat research and global food security initiatives in Western Canada’s research institutions, and will increase Viterra’s funding to other Western Canadian agricultural and educational institutions.
In Australia, the addition of Viterra’s operations is expected to further Glencore’s operational and commercial advantages by driving synergies and efficiencies for the benefit of Australian growers at the local level.
Also as part of the transaction, Glencore has agreed to sell certain assets of Viterra to Agrium Inc. and Richardson International Ltd. Agrium has agreed to buy the majority of Viterra’s retail agri-products business, including its 34% interest in Canadian Fertilizer Ltd. for about C$1.8 billion, while Richardson International will acquire 23% of Viterra’s Canadian grain handling assets, certain agri-centers and certain processing assets in North America for about C$0.8 billion.