By Dana Cimilluca, Anupreeta Das and Edward Welsch
Glencore International AG and Cargill Inc. are among companies
that are interested in possibly buying Canadian agribusiness
heavyweight Viterra Inc., according to people familiar with the
matter, as a wave of consolidation in the industry swells.
Viterra disclosed Friday that it received "expressions of
interest" from unidentified third parties, sending the
Calgary-based company's stock price soaring on expectations of a
takeover. The company is now expected to run a sale process,
exploring the interest of a handful of possible buyers, the people
said.
Viterra operates grain-marketing and distribution businesses
across Canada, the U.S., Australia, New Zealand and China.
Switzerland's Glencore is a commodities-trading powerhouse that
moves and markets everything from grain to oil and coal around the
world. It is currently attempting a $90 billion merger with Xstrata
PLC, a big metals and coal-mining company in which it already holds
roughly a one-third stake.
Viterra shares rose 24% Friday to 13.58 Canadian dollars
(US$13.71) in Toronto, giving it a market capitalization of C$5.05
billion (US$5.1 billion). Its shares also trade in Australia.
Scarcity of supply and booming global demand has prompted all
manner of commodities players to seek mergers in recent years. In
addition to the proposed Glencore-Xstrata tie-up and a number of
mining deals, BHP Billiton in 2010 made an unsolicited $38.6
billion offer for Potash Corp. of Saskatchewan Inc., the world's
largest fertilizer producer, in a bet that developing economies
will drive up demand for the world's food supply. The deal
ultimately fell apart, however, amid political opposition in
Canada.
Glencore could ultimately have a difficult time pulling off such
a large deal as Viterra would be at a time when it is trying to
finalize the massive and complicated Xstrata combination.
Glencore's ability to make that deal happen is far from guaranteed,
given objections raised by a number of Xstrata shareholders, who
ultimately will have to bless the union.
While it is unclear who besides Glencore and Cargill, a
grain-marketing giant, are in the mix, companies that might benefit
from buying or partnering with Viterra also include Archer Daniels
Midland Co. and Louis Dreyfus.
Viterra's businesses could be more attractive to suitors now
that Canada's government has legislated the end of the Canadian
Wheat Board's monopoly over wheat and barley prices and production.
The monopoly is set to end later this year.
Representatives at Glencore, Cargill and Archer Daniels Midland
declined to comment. A Louis Dreyfus representative couldn't be
reached.
Still, the fate of BHP's Potash bid shows that for assets
considered strategically important to the country, takeovers by
foreign companies in Canada can be difficult to pull off.
The Sunday Telegraph in the U.K. earlier reported on Glencore's
interest in Viterra.
A spokesman for Viterra declined to provide further details
beyond its statement.
Viterra, which also sells agricultural equipment, fertilizers,
seed and pesticides to farmers, in 2009 purchased Australia's ABB
Grain for about C$1.4 billion.
The Alberta Investment Management Corp. last fall publicly
criticized Viterra's board for not doing enough to increase
shareholder value. AIMco, one of Canada's biggest pension funds,
owns 16% of Viterra's shares, according to FactSet. In November,
Viterra named Brian Gibson, who oversees public equities for AIMco,
to its board.
-Ben Dummett contributed to this article.