Tags: glencore | viterra | m&a

UK Paper: Glencore Makes $5.49 Billion Bid for Viterra

Sunday, 11 March 2012 05:40 PM

Glencore International Plc made a 3.5 billion-pound ($5.49 billion) bid for Viterra Inc., Canada’s largest grain handler, The Sunday Telegraph reported, without saying where it got the information.

The approach prompted a Friday statement from Viterra, saying the company had received expressions of interest from third parties, the London-based newspaper said.

Chief Executive Officer Ivan Glasenberg wants to add Viterra to Glencore’s expanding grain business even as the trading company seeks to complete a takeover of Swiss metals and coal producer Xstrata Plc, the Telegraph said. Glencore, the largest publicly traded commodities trader, is offering 27.7 billion pounds in stock to acquire Xstrata in what would be the world’s biggest mining takeover.

“Glencore’s bid for Viterra continues Glencore’s theme to be the DHL of the commodity business,” London-based Fairfax IS analyst John Meyer said in an e-mail Sunday. The deal “may help the agricultural trading business to return to profit after a difficult year through 2011” and may be followed by a bid for U.S. grain-storage company Gavilon Group LLC, he said.

Holly Gibney, a spokeswoman for Viterra of Regina, Saskatchewan, declined to comment. A spokesman for Baar, Switzerland-based Glencore declined to comment when contacted by Bloomberg News Sunday.

Monopoly Ending

Buying Viterra would give Glencore the largest share of the Canadian grain-handling market just as the Canadian Wheat Board’s monopoly over wheat and barley grown in the west of the country comes to an end. Viterra’s share of Canadian grain- handling may rise to almost 50 percent in the next few years from 45 percent, its Chief Executive Officer Mayo Schmidt said in an interview on March 8.

Viterra said in January it expects to increase grain volumes and earnings after the board’s control of supplies ends. The Canadian government passed a law in December that will end the monopoly and give farmers the choice to sell to other buyers as of Aug. 1.

Shares of Viterra rose 24 percent to C$13.58 in Toronto on March 9 following the company’s statement, boosting its market value to C$5.05 billion.

As well as being a potential acquisition target, Viterra is considering making a takeover offer of its own. Viterra and Glencore are among companies exploring a bid for Gavilon Group, people familiar with the matter said March 6.

Viterra is based in the same province as Potash Corp. of Saskatchewan Inc., which in 2010 fended off a $40 billion hostile bid from Australia’s BHP Billiton Ltd. The Canadian government blocked BHP’s bid, saying the sale of the world’s largest fertilizer company wouldn’t provide a “net benefit” to the nation.

The federal government should block any foreign takeover of Viterra under the Investment Canada Act, just as it did with BHP, Pat Martin, a New Democratic Party lawmaker, said by telephone on Friday.

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Sunday, 11 March 2012 05:40 PM
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