Review period extended for $6.1 billion Viterra takeover deal

The federal government will take another month to review a proposed multibillion-dollar takeover of Canada’s largest grain handling company.

Industry Canada was to have completed its review of a proposed $6.1 billion takeover of Viterra by June 18.

However, Viterra confirmed last week that the review period has been extended by one month.

Officials from Glencore International, the proposed buyer, also confirmed the one-month extension but said they still expect to have all necessary approvals in place and the transaction completed by July 31.

“Glencore remains focused on achieving all regulatory approvals, including those under the Investment Canada Act, in time for the closing of the transaction, which is expected to be by the end of July 2012,” the Swiss company said in a June 17 news release.

Approval by Industry Canada is one of the last remaining regulatory hurdles facing the Glencore deal.

Canada’s Competition Bureau indicated May 3 that it would not challenge the transaction.

The deal has also gone through antitrust proceedings in the United States, and Australia’s competition regulator, the Australian Consumer and Competition Commission, has granted unconditional approval for the transaction.

Stefanie Power, a media relations spokesperson for Industry Canada, said officials could not comment specifically on the Glencore-Viterra deal for confidentiality reasons.

However, Power said industry minister Christian Paradis would OK Glencore’s application for Industry Canada approval if the deal is deemed to be a net benefit to Canada.

Factors that could influence the minister’s decision include:

  • the effect of the investment on the level of economic activity in Canada, including employment, resource processing and the use of parts, components and services produced in Canada
  • the degree and significance of participation by Canadians in the Canadian business
  • the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada
  • the effect of the investment on competition within any industry or industries in Canada
  • the compatibility of the investment with national industrial, economic and cultural policies
  • the contribution of the investment to Canada’s ability to compete in world markets

“In making a determination, the plans, undertakings and other information submitted by the investor are all carefully considered,” said Power.

Liberal MP Ralph Goodale said the Industry Canada review must be conducted thoroughly and carefully to ensure that Canadian farmers and Canada’s economy are not adversely affected.

The review should include a thorough investigation of Glencore’s past business practices, its labour practices and its environmental record in other countries, he said.

“There has been a lot of controversy surrounding this company and it’s about to become one of the biggest corporate citizens in Canada,” Goodale said.

“There needs to be a very thorough examination of who Glencore is and what their established business practices are. Surely that will be part of the Government of Canada determining net benefit or not.”

Although the Competition Bureau has said it will not challenge the Glencore-Viterra deal, it has yet to weigh in on side deals involving the proposed transfer of Viterra assets from Glencore to Calgary-based fertilizer manufacturer Agrium and Winnipeg-based grain handling company Richardson International.

Goodale said the Agrium deal is particularly worrisome and could leave farmers operating in a less competitive environment.

“That’s one area where there was a pretty clear consensus,” he said.

“People from all ends of the spectrum said there is a risk of diminished competition (in the crop nutrients sector) that would work to the disadvantage of farmers.”

He also said Canada should seek assurances from Glencore that it will carry through on its promise to establish a North American agricultural head office in Regina.

“It will be important to get the detail of exactly what does that promise amount to?” Goodale said.

“Is it symbolic or is it substantive … and if it is substantive, how are you going to enforce that substance? What are the levers that the Government of Canada will have to make sure that those promises of jobs and corporate (investment) … in Regina are in fact real?”

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