Glencore International PLC on June 7 announced that it has received unconditional approval from the Australian Competition and Consumer Commission (ACCC) for its acquisition arrangement with Viterra Inc. Glencore said ACCC’s approval satisfies one of the final conditions to the closure of the proposed transaction.
Glencore and Viterra signed a definitive agreement in March (GM March 26, p. 1) whereby Glencore will 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 deal also involves Agrium Inc. and Richardson International, a privately held grain trader and input retailer based in Winnipeg. Richardson 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. Agrium has reached an agreement with Glencore to acquire the majority of Viterra’s Agri-products business, including 232 of Viterra’s Canadian farm-supply outlets, 17 farm outlets in Australia, and a minority stake in the Canadian Fertilizers Limited plant at Medicine Hat, Alberta, for C$1.15 billion. The Alberta plant is majority owned by CF Industries.
“The ACCC has concluded that the proposed acquisition would be unlikely to substantially lessen competition as post merger Glencore would continue to face competition from a number of significant competitors in the market for grain trading in South Australia," ACCC Chairman Rod Sims said. ACCC said it recognized a number of concerns during its public review process, in particular the fact that “Viterra is in a strong position in South Australia with a monopoly position in bulk grain port terminal services and significant market share in up-country grain storage and handling.”
However, ACCC concluded that the proposed acquisition “would be unlikely to enable Glencore post acquisition to depress prices paid to growers for grain or raise prices of grain to domestic customers due to the presence of a number of viable alternative grain traders,” Sims said.
The ACCC approval comes after the Ontario Superior Court of Justice on May 31 issued a final order approving the transaction under the Canadian Business Corporations Act. At a special meeting on May 29, Viterra shareholders passed a resolution to approve the transaction. Earlier in May the Canadian Competition Bureau said it will not challenge the transaction, and the U.S. statutory waiting period for antitrust review expired on May 3.
“We welcome the response of Viterra’s shareholders to the deal,” Chris Mahoney, director of Agricultural Products for Glencore, said on May 30. “We look forward to becoming part of the agriculture industry in Western Canada and to contributing to the expansion of the grains and oilseeds sector in those communities now served by Viterra, in Canada, Australia, and elsewhere.”
Glencore said it continues to work within the Investment Canada, Australian Foreign Investment Review Board, and New Zealand Office of Overseas Investment review processes, and that it continues to pursue all other regulatory approvals required to complete the transaction, which it expects to close by late July.
Agrium CEO Mike Wilson told investors in Chicago on June 13 that the closing might not happen until August, however. Wilson said the Canadian Competition Bureau will begin a 45-day review of Glencore’s deals with Agrium and Richardson as soon as Glencore’s acquisition of Viterra is complete, but “they could ask for another 45 days” after that. As a result, Wilson said Agrium’s deal with Glencore is likely to close in the fourth quarter. “Can’t wait to get Viterra into the fold,” he said.
That sentiment was not sh