Swiss commodity trading giant Glencore is reported to be working with Richardson International and Agrium on a bid for Viterra.
The information comes from unnamed sources in a Reuters news story.
Meanwhile, the Globe and Mail quotes unnamed sources saying that Richardson would take some of Viterra’s Canadian elevators and port capacity, Agrium the Canadian farm service operations and Glencore the balance of the Canadian operations and the Australian operations.
Early today, Viterra announced it has set up a process for interested suitors allowing them to inspect the company’s finances and operations in preparation for bids.
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This would entail setting up confidentiality agreements to allow companies to do their due diligence.
Trading was halted earlier today in advance of Viterra making this announcement. When trading resumed, its share price jumped nine percent to slightly more than $16. On March 8, the day before Viterra first said it had received interest from a third party, shares were trading around $11.
Viterra shares closed March 15 at $16.09.
There is still no official confirmation about what companies are actually interested.
There is much media and industry speculation about who the suitors are for Canada’s largest grain company.
No company has said it is making a move, but various newspapers and wire services have quoted unnamed sources identifying several multinational commodity companies, including Glencore and U.S.-based food and commodity companies such as Archer Daniels Midland, Bunge and Cargill, the world’s largest privately owned company. Hong Kong-based trading company Noble Group is also said to be interested.
Viterra warned in today’s statement that the speculation might not be true and that there is no guarantee a transaction will occur.
The following is Viterra’s statement:
“Viterra Inc. at the request of Market Surveillance on behalf of the Toronto Stock Exchange, acknowledges that, in response to expressions of interest from third parties to acquire the company, a process has been established by the board of directors of Viterra, which includes confidentiality agreements being entered into and the provision of due diligence.
“Viterra is aware of press reports speculating about, among other things, the process, parties involved and third parties expressions of interest of at least $16 Cdn per Viterra common share. Viterra cautions investors not to rely on these press reports as there can be no assurance that a transaction will occur and that if one does occur, there can be no assurance at what price it will be completed.
“Viterra has engaged financial and legal advisers to provide support with this process.
“A further announcement will be made if appropriate.”
Given the recent history of BHP Billiton’s failed bid to take over Potash Corp. in 2010, there have been questions about how governments would react if a foreign company bid on Viterra.
But the Harper government has signalled openness.
“Foreign investments help Canadian companies to grow and innovate and provide new opportunities to connect our firms to the world,” industry minister Christian Paradis said in the House of Commons earlier this week.
“Our government will continue to welcome investment that benefits Canada.”
Saskatchewan premier Brad Wall, who pressured Ottawa to block BHP’s move on Potash Corp., said there are differences here.
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 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.
The Grain Services Union, which represents Viterra workers, said a sale of Viterra could have implications for the 400 head office staff in Regina.
A sale to Glencore, which now has no presence in the North American grain industry, might have little impact because it would need staff to run the operation, but a sale to an established player like Richardson or Cargill, which run their Canadian operations from offices in Winnipeg, would likely entail more consolidation and layoffs.
