Viterra Inc. remained close-mouthed today, March 12, as its share prices soared and rumours swirled about a possible takeover by Swiss giant Glencore.
Glencore International Plc is the world’s largest publicly traded commodities supplier. Its name emerged most often as media outlets and others speculated on who had made the play for Canada’s largest grain handler.
Trading of Viterra stock in Toronto was briefly halted March 9 while the company issued a statement.
“In view of market activity in Viterra’s shares, the company acknowledges it has received expressions of interest from third parties,” the statement said. “There can be no assurance that any agreement or transaction will result.”
More than 15 million shares traded March 9, up significantly from the usual average of 789,000. Shares closed at $13.58, up from $10.98 the previous day.
The price continued to climb March 12 and closed at $14.45. The volume was an extraordinary 25.8 million shares.
Speculation grew over the weekend as a British newspaper reported that Glencore had offered an unsolicited bid of $5.5 billion. Others suggested Cargill, Archer Daniels Midland, Bunge, Agrium and others could be involved. None of the companies have commented.
Glencore held talks with Louis Dreyfus last year, but they didn’t result in a deal.
“Glencore clearly want to fill that hole in their portfolio,” said an unnamed source in a story from Reuters News Agency.
“When things didn’t seem to be going well with Dreyfus, they had to look around.”
Taking over Viterra would give Glencore access to Canadian crops, particularly those that will no longer be under the monopoly control of the CWB.
Glencore and Viterra have been rumoured suitors for Gavilon, an American energy and grains trader, although Viterra chief executive officer Mayo Schmidt would not comment on that possibility during a March 8 conference call to announce first quarter results.
Should an actual takeover bid be tendered, it would have to pass a federal government review under the same law that prevented BHP Billiton from taking over Potash Corp. in 2010.
In Ottawa, NDP agriculture critic Pat Martin said any takeover must be in the best interests of Canadians.
“I cannot imagine any upside to losing our domestic control over grain production and grain marketing,” he said during question period in the House of Commons.
“Will (the government) agree to intervene if it cannot be clearly demonstrated that this is in the best interests of grain producers and the general public for their food security and their domestic control over our food supply?”
Industry minister Christian Paradis, who is also minister of state for agriculture, said the government welcomes foreign investment.
“Unlike the opposition, our government understands the importance of attracting foreign investment to our economy,” he replied.
“Foreign investment helps Canadian companies to grow and innovate and provides new opportunities to connect our firms to the world.”
Agriculture minister Gerry Ritz said he would not speculate on anything related to Viterra.
Saskatchewan premier Brad Wall told reporters March 12 he had briefly spoken to Viterra management but was offered “nothing more than anyone could have gleaned from reading the same business publications.”
He said the province would study a proposed takeover in the same way it studied the potash takeover bid.
“If there is to be a takeover, we would undertake the same very deliberative, very thorough analysis of the takeover and the measure we would use before coming to any conclusions, before making a recommendation to the federal government, is is this a net benefit to Canada and to the people of Saskatchewan, period?”
Wall said the grain handling business isn’t a strategic resource in the way that potash is, but the NDP opposition disagreed, saying food must be considered strategic.
Wall said the government would examine the economic impact on the province if Regina-based Viterra fell into foreign hands. Jobs and fiscal impact are an important measure of net benefit, he added.
— with files from Barry Wilson, Ottawa bureau
