The biggest grain industry deal in the history of Canada is one step closer to completion.
The Competition Bureau has approved the sale of Viterra to Glencore International.
One of the biggest remaining obstacles to the $6.1 billion deal is a vote by Viterra’s shareholders scheduled for May 29. But there are other steps required, such as Investment Canada Act and Foreign Acquisitions and Takeover Act approval, as well as approvals by regulators in other countries where Viterra operates.
The Competition Bureau’s May 3 letter calling for “no action” on the Glencore takeover relates only to the Viterra transaction.
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“The reviews of the subsequent proposed transactions involving Agrium and Richardson (International) will be conducted independently,” said the bureau in an e-mail response to The Western Producer.
Glencore has agreed to sell Richardson a number of grain handling and processing assets for $900 million plus working capital. The sale includes 19 Viterra elevators and the crop input centres at those elevators.
It has also agreed to sell 90 percent of Viterra’s crop input facilities and its 34 percent stake in an Alberta nitrogen fertilizer manufacturing facility to Agrium Inc. for $1.5 billion plus working capital.
Farm groups are interested in what the bureau has to say about those two deals. Producers seem satisfied with the Richardson arrangement but they are nervous about the Agrium agreement.
Agricultural Producers Association of Saskatchewan met with Glencore recently to convey points raised by the rural municipalities it represents.
“Some of the RMs sent us letters and the big concern was the power that Agrium is going to get by increased control of the fertilizer industry,” said APAS vice-president Arlynn Kurtz.
The deal would result in the transfer of 232 of Viterra’s western Canadian retail outlets to Agrium. The company already owns 65 of its own, giving it a total of 297 facilities. But some allege that its power extends beyond those assets.
“One of the concerns is that some of the independent fertilizer retailers are aligned with Agrium so Agrium has direct or indirect influence in the retail market,” said Kurtz.
Producers are also worried that Viterra’s brand of herbicides will soon evaporate from the marketplace.
“If those disappear that is going to reduce competition in that area,” said Kurtz.
Agrium spokesperson Richard Downey said producer fears are unfounded.
“Retail is an extremely competitive market,” he said.
He noted that if Agrium ends up with 297 retail outlets it won’t wield much more market power than Viterra did with its 258 crop input stores.
Downey also dismissed the notion that Agrium’s stranglehold on nitrogen manufacturing in Western Canada would result in price gouging.
“Prices and market conditions are really determined globally,” he said.
Downey said farmers don’t have to worry about losing Viterra’s pesticide offerings. Good quality products will be incorporated into the company’s Loveland brand of crop protection products marketed through Agrium’s Crop Production Services outlets.
The bureau has no set timeline for the Agrium and Richardson reviews. It said it will consult with a variety of industry participants.
