Tags: Glencore | Viterra | Agrium | Richardson

Glencore Said to Near Viterra Deal With Agrium, Richardson

Monday, 19 March 2012 01:03 PM

Glencore International Plc, the largest publicly traded commodity supplier, and two Canadian agricultural companies are nearing a deal to buy Viterra Inc., said three people with knowledge of the plan.

Glencore is bidding with Agrium Inc. and Richardson International Ltd. for Regina, Saskatchewan-based Viterra, the people said, asking not to be identified before a formal announcement. A deal may be announced within 24 hours, two of the people said. The Viterra sales process closed yesterday and other parties had expressed an interest, one of the people said.

No final accord has been reached and the talks could fall apart, one of the people said. An agreement may be reached at the lower end of a price range of C$16 to C$19 a share, two people said. Viterra closed at C$16.21 on March 16, giving the company a market value of C$6.03 billion ($6.08 billion). Trading in Viterra was halted in Toronto today.

Glencore’s move on Viterra is part of Chief Executive Officer Ivan Glasenberg’s efforts to extend the trader’s geographical reach and expand its agriculture unit. The Baar, Switzerland-based company is also trying to seal a 23 billion- pound ($36.5 billion) friendly takeover of metals and coal producer Xstrata Plc, which it announced in February.

Viterra “is a very unique asset,” Amit Wadhwaney, a portfolio manager at Third Avenue Management LLC, Viterra’s fourth-largest shareholder, said in a March 15 interview. “To replicate something like that would take years if not decades.”

Viterra has said its earnings and market share will increase after Aug. 1, when wheat and barley farmers in western Canada can sell to buyers other than the Canadian Wheat Board. It owns more than half the grain-export capacity in Canada as well as ports in South Australia, which are key gateways to growing markets in Asia, according to the company.

Earnings to Rise

Tracey Shelton, a spokeswoman for Richardson, Simon Buerk, a spokesman for Glencore, and Todd Coakwell, an Agrium spokesman, declined to comment. Holly Gibney, a spokeswoman for Viterra, didn’t immediately return telephone and e-mail messages seeking comment.

Glencore advanced 0.2 percent to 419.1 pence in London trading at 1:37 p.m.

Annual earnings before interest, taxes, depreciation and amortization will rise by C$50 million a year after 2014 as Viterra’s market share expands to close to 50 percent from 45 percent, the company forecast March 8.

Grain handling and marketing made up 68 percent of Viterra’s sales in the year through Oct. 31 with agricultural products accounting for 19 percent and food processing at 13 percent, data compiled by Bloomberg show.

Richardson, the second-largest grain handler in Canada, is a unit of Winnipeg-based James Richardson & Sons Ltd. Calgary- based Agrium is North America’s largest fertilizer supplier by revenue.

Glencore is among companies exploring an offer for Omaha, Nebraska-based grain trader Gavilon Group LLC, people familiar with the matter said March 6.

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Monday, 19 March 2012 01:03 PM
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