Switzerland-based commodity supplier Glencore has signed a deal to buy Canadian agribusiness group Viterra for C$6.1bn (US$6.15bn).
The agreement, announced today (20 March), follows speculation over the future of Viterra and comes amid interest in grain processors in Canada, where the country’s government is ending a monopoly on sales of wheat and barley.
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The acquisition will bolster Glencore’s presence in North America, with the UK-listed firm saying Canada will become a “key growth platform” for the company. It called Canada “one of the world’s most attractive grain and oilseed markets”.
The acquisition of Viterra will also expand Glencore’s operations in Australia, which it hopes will enable it to “take advantage of new growth opportunities in rapidly-expanding global markets”.
However, Glencore has agreed to sell on the majority of Viterra’s Canadian assets to local grain handler Richardson International and farm retailer Agrium.
Glencore said the sale of those assets is “expected to result in the creation of a more robust competitive landscape for Canadian farmers”.
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By GlobalDataIt added: “Glencore also intends to grant third party access to its handling infrastructure at prevailing market rates.”
Agrium and Richardson will buy the majority of Viterra’s Canadian and other assets for around C$2.6bn in cash.
Richardson will pay $800,000 for 23% of Viterra’s Canadian grain handling assets, as well as certain agricentres and processing assets in North America. Agrium will acquire the majority of Viterra’s retail agri-products business including its 34% interest in Canadian Fertilizer, for C$1.8bn in cash.
“The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets,” said Glencore director of agricultural products Chris Mahoney. “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.”
Viterra’s board has recommended the C$16.25-a-share offer from Glencore. Investors holding 16.5% of Viterra’s shares have also entered into agreements with Glencore to back the deal.
The transaction will require approval by two-thirds of the votes cast at a meeting of Viterra shareholders expected to be held in May. If the deal does not close for regulatory reasons, Glencore has agreed to pay Viterra C$50m.
