Glencore to acquire Viterra for $6.2bn

Swiss commodities trader Glencore International has signed a definitive agreement to acquire Canadian grain handler Viterra in a C$6.1bn ($6.2bn) all-cash deal.

Gelncore has also entered into an agreement to sell certain Viterra’s assets such as grain elevators and retail agri-products business to Agrium and Richardson International to allay concerns of the Ottawa regulatory body, which might block the deal on competition grounds.

The acquisition will enable Glencore to cement its position in grain markets as Viterra operates grain-marketing and distribution businesses across Canada, the US, Australia, New Zealand and China.

Further, the Canadian market will also open up opportunities for Glencore once the Canadian Wheat Board’s monopoly ends by August.

Glencore Agricultural Products director Chris Mahoney said the acquisition of Viterra reflects the company’s strong belief in the future potential of the Canadian and Australian grain markets.

"This is an exciting opportunity to deliver the real benefits that can be generated through the combination of Glencore’s and Viterra’s respective assets, people and know-how to both farmers and customers in Canada, Australia and further afield," Mahoney added.

Glencore plans to fund the transaction through existing cash resources and available credit facilities.

The friendly takeover, already approved by Viterra’s board, requires shareholder approval and will also be subject to regulatory reviews in Australia, where it is a major player.

Under the agreement with Agrium, Glencore will sell the majority of Viterra’s retail agri-products business including the 34% stake in Canadian Fertilizer Limited (CFL) for C$1.8bn ($1.8bn).

Richardson International will purchase 23% of Viterra’s Canadian grain handling assets, certain agri-centres and processing assets in North America for C$800m ($807.90m) in an all-cash deal.

Glencore also noted that the deal will not affect its $36bn takeover of Xstrata, an Anglo-Swiss mining company.

Following the completion of the acquisition, Glencore plans to make Viterra’s Regina head office as the platform for its North American agricultural operations and consolidate the executive offices in Saskatchewan.

Image: The acquisition of Viterra will enable Glencore to cement its position in grain markets across Canada, the US, Australia, China and in New Zealand. Photo: Viterra.