Glencore would carve up Viterra into three pieces if it wins a bidding war for Canada’s largest grain handler, an industry source said, describing the Swiss trader’s plan for navigating the government scrutiny that a foreign takeover would face.
The source told Reuters the commodity trading giant wanted to buy all of Viterra and then sell its retail business to Agrium, a Canadian fertiliser producer.
Richardson International, a closely held Canadian grain trader, would take Viterra’s food processing unit in a rare and complex deal known as “back-to-back” transaction.
Earlier reports said Glencore, also bidding for mining group Xstrata, was planning a joint offer with Agrium and Richardson, something that might help the Swiss-based trader get round Canadian concerns about a sale to a foreign entity.
As the second-largest Canadian grain handler, Richardson would likely also be interested in some grain elevator and port assets.
Viterra, based in Regina, Saskatchewan, said on Thursday it had established a process for potential buyers, and its stock rose 10 per cent. Viterra stands to profit from a government decision to end the Canadian Wheat Board’s monopoly on Western Canadian wheat and barley sale. A successful bidder would win access to Canada’s high-quality canola, spring wheat, oats and durum wheat supplies. Canada, the world’s No. 8 grains producer, is the leading exporter of each crop.
The company’s shares ticked up 0.6 per cent on Friday to C$16.18, while Glencore stock gained 1.5 per cent to 420.36 pence.
Shares have hovered around $16 since on Thursday, when Viterra said it was aware of media reports of interest at that price. That would value it at some C$5.9 billion ($5.95 billion).
US-based Bunge and Archer Daniels Midland have also made approaches to Viterra. Sensitivity to anti-trust issues will be key to how Glencore, Richardson and Agrium -or other suitors -propose to break down the assets, said a second source familiar with the matter. The source, who is not authorized to speak on the record, asked not to be named in this story.