United Grain Growers and Weyburn Inland Terminal are negotiating to form an alliance.
The financial and operating details are still under negotiation, but the companies said Sept. 28 the basis of the agreement is that UGG would buy a “significant minority interest” in the Weyburn grain company, but WIT would remain an independent company.
The companies hope an agreement can be struck and approved by both corporations’ boards of directors by November. The deal will also have to be approved by WIT’s 1,400 shareholders.
Norm Flaten, WIT president and chief executive officer, said the seeds of the announcement were sown earlier this year when several big grain companies independently approached WIT about a partnership.
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“The more we thought about it and the more we discussed it with a number of these companies, the more we thought there could be a substantial advantage to having a form of alliance,” Flaten said.
UGG’s proposal appeared to be the best, he said. A partnership with UGG, with its links to American food giant Archer Daniels Midland, will help WIT, he said.
“As far as processors and end users are concerned, their having ADM connections would give us quite a bit of leverage in that area. And they have other lines as well in terms of seed and crop protection services. But those details are not ironed out at all yet.”
Chris Martin, managing director of business development for UGG, said an alliance with WIT would give UGG a stronger presence in southern Saskatchewan.
A February 1998 report by the Dominion Bond Rating Service Ltd. noted UGG’s presence in Saskatchewan, particularly the southern half, was weaker than in other provinces.
WIT is the largest producer-owned inland grain terminal in Western Canada. It handled about 500,000 tonnes of grain in 1997.
