Viterra has raised $450 million to help finance its proposed purchase of ABB Grain Ltd. in Australia.
The subscription receipt offering was announced April 29 and closed May 13.
A total of 56.25 million receipts were issued and sold at $8 each. Each receipt entitles the holder to receive one common share of Viterra in the event of a successful ABB transaction.
The receipts will be fully refunded if a definitive agreement is not reached with ABB by June 30 or the acquisition is not closed by Nov. 30.
In a news release announcing the closing, Viterra said the money raised will provide “a portion of the funding that may be required” should the ABB deal be completed.
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The company has declined interview requests since news of the proposed deal became public in mid-April.
Viterra is offering $1.42 billion to buy the Australian grain and agribusiness company, financed by a combination of cash, shares and dividends.
ABB’s board of directors has not made a formal public response to Viterra’s offer.
David Newman, an analyst with National Bank Financial who tracks Viterra, said the successful receipt offering bodes well for a successful outcome to the transaction.
“With a total debt-to-capital ratio of about 33 percent, and essentially no debt as of (March 31), Viterra is well positioned to make acquisitions,” he wrote in a commentary published May 14.
In April 2008, Viterra successfully completed a $442 million share offering and said the money would be used specifically to finance future acquisitions.
Makes sense
Newman said the deal makes sense for Viterra from the operations side.
“For those with a favourable opinion on the long-term agricultural story, being positioned in two of the leading grain export nations should help Viterra gain a very strong position in end markets,” he wrote.
The value of the deal is estimated at $1.42 billion Cdn based on Viterra’s reported offer of $9 to $9.50 Aus per share.
That represents a significant premium over ABB’s closing price of around $7 the day before news of the takeover bid became public.
Some Canadian analysts have suggested Viterra may be overpaying for ABB, but Australian commentators have said the proposed price undervalues the company.
ABB is one of Australia’s leading agribusinesses, involved in barley malting, agricultural input sales and grain handling, marketing and storage.
It is Australia’s largest barley exporter and second largest wheat supplier and also has operations in New Zealand and Ukraine.
