Glencore International PLC and Viterra Inc. announced on March 20 that they have signed a definitive agreement in which Glencore has agreed to acquire all of the issued and outstanding shares of Viterra for C$16.25 per share. The transaction values Viterra’s equity at approximately C$6.1 billion on a fully diluted basis. The transaction will be funded out of Glencore’s existing cash resources and available credit facilities.
The deal also involves Agrium Inc. and Richardson International, a privately held grain trader and input retailer based in Winnipeg. Agrium reported that it has entered into a definitive agreement with Glencore to acquire the majority of Viterra’s Agri-products business, and Richardson announced that it has agreed to acquire more than C$900 million worth of Viterra’s grain handling assets, crop input and processing facilities, and related working capital.
“The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets,” said Chris Mahoney, director of Agricultural Products for Glencore. “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.”
Glencore, a multinational mining and commodities trading company headquartered in Baar, Switzerland, said in a statement that the Viterra acquisition is consistent with its strategy of strengthening its position as one of the global leaders in grain and oilseeds markets.
“Viterra’s Tier 1 portfolio of assets in Canada and Australia will allow Glencore to build upon its position as one of the world’s largest commodity suppliers and provides the opportunity to leverage Glencore’s extensive global networks, expertise and best practices in order to create additional value across its agricultural businesses,” Glencore said.
"Viterra employees created a world-class agri-business, of which I am very proud,” said Mayo Schmidt, Viterra’s president and CEO. “This has been recognized by Glencore and its partners, and this transaction creates value and opportunities for employees, our communities, farmers, and customers in all the markets we serve.”
In a March 20 teleconference after the deal was announced, Schmidt said “it was no surprise in recent months to see our success acknowledged by our peers and to receive expressions of interest from around the globe. As a public company, we must continue to grow and continue to evolve.”
Under the agreement, Agrium would acquire approximately 90 percent of Viterra’s 258 Canadian retail facilities, more than tripling its retail outlets in Western Canada with the addition of some 200 stores. Agrium will also acquire all of Viterra’s Australian retail facilities, as well as their minority position in a nitrogen facility located in Medicine Hat, Alberta. The Alberta plant is majority owned by CF Industries.
Agrium currently operates 65 Canadian-based facilities as part of its total of 1,200 retail facilities in the U.S., Australia, Argentina, Canada, Uruguay, and Chile.
Agrium valued the acquisition price from Glencore at approximately C$1.15 billion, plus an estimated C$0.5 billion in working capital, in a back-to-back purchase and sale arrangement. In 2011, Viterra’s total Agri-products business generated C$2.4 billion in revenue and C$244 million in EBITDA, according to Viterra’s annual report.
“We believe our Crop Production Services Retail business can provide significant value for Canadian farmers and that it provides an opportunity for growth in a market where we currently have a limited retail presence,” said Agrium Presid