Canada’s grain industry could soon become a little more red maple leaf and a little less red, white and blue.
Archer Daniels Midland, the U.S.-based multinational agrifood company, now holds 28 percent of the common shares and two seats on the board of directors of Agricore United, Canada’s largest grain company.
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_____ – Update –
Wednesday May 9, 2007. _____ Read Also
Farming Smarter receives financial boost from Alberta government for potato researchFarming Smarter near Lethbridge got a boost to its research equipment, thanks to the Alberta government’s increase in funding for research associations. Saskatchewan Wheat Pool announced today it has successfully outbid James Richardson International in an effort to take over the country’s largest grain company, Agricore United. A news release announcing the deal says the AU board of directors is supportive of the Pool’s $1.8 billion all-cash offer, and will be recommending AU shareholders accept it. The announcment of the deal was made after this week’s Western Producer went to press. A copy of the news release is available via the SWP website, here. The Western Producer will have complete coverage of this story in its May 17 issue.
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If James Richardson International succeeds in its bid to take over AU and create a privately owned firm called Richardson Agricore, with no publicly traded shares, that will spell the end of ADM’s direct investment in the prairie grain handling industry, other than a couple of small processing facilities in Manitoba and Alberta.
The only way for ADM to remain a player would be for it to make a superior bid for AU that would be accepted by the company’s shareholders.
The firm, with its head office in Decatur, Illinois, has given no public indication of its intention with respect to AU.
A spokesperson for AU declined to speculate on ADM’s plans, saying only that under the terms of its strategic alliance with AU, the U.S. firm is obliged to support any merger or takeover deal recommended by AU’s board of directors unless it makes a superior offer itself.
“I don’t believe they have made any declaration as to whether they support this offer or not,” said the AU official.
JRI’s offer of $19.25 cash for all outstanding AU shares expires June 12. AU shareholders will vote on whether to accept the bid at a special meeting in Winnipeg the next day.
If approved, a court hearing will be held in Winnipeg June 15 to make the transition from a publicly traded company to a private company owned by JRI International and the Ontario Teachers’ Pension Plan.
One farm organization that has long campaigned against foreign investment in the Canadian grain industry was measured in its reaction to the potential disappearance of ADM from the scene.
National Farmers Union executive director Terry Pugh said that while increased Canadian ownership is a good thing, he doesn’t think this represents a reversal of the long-term trend toward Americanization.
“If anything, this is a blip,” he said. “With all the jockeying for position going on in the industry right now, things could change again pretty quickly.”
With the Canadian Wheat Board facing a diminished role in barley marketing and perhaps wheat marketing down the road, foreign firms may find it even more attractive to invest in Western Canada, he said.
If Saskatchewan Wheat Pool’s bid for AU fails, it could look for a new partner, which could mean a U.S. investor, he said.
