Former Canadian Wheat Board to buy grain-handling assets
CWB, formerly known as the Canadian Wheat Board, has agreed to buy grain handling assets from Upper Lakes Group, giving it flexibility to move the crops it buys off the Canadian East Coast.
The deal, announced Tuesday, includes Mission Terminal Inc, which has a terminal at Thunder Bay, Ontario; a grain facility at Trois-Rivieres, Quebec; and a stevedoring service.
The purchase price was not disclosed. The deal is scheduled to close on Dec. 31.
Winnipeg, Manitoba-based CWB markets wheat, durum, barley, canola and peas, under the control of the Canadian government, which is guaranteeing its borrowings until it is sold or develops a plan to be self-sustaining.
Ottawa dismantled the Wheat Board's 69-year-old marketing monopoly over Western Canadian wheat and barley in August 2012. It agreed to temporarily back CWB but required it to produce a plan to privatize within four years.
CWB lacks a network of country elevators to buy crops directly from farmers, or port terminals to store them until they can be loaded onto ships for export. That has left CWB to arrange agreements with Canada's grain handlers, who include Richardson International, Viterra and Cargill Ltd
Acquiring Mission Terminal allows CWB to buy grain directly from farmers and move it onto ships bound for the Atlantic Ocean.
"The purchase of these companies is a first step in building and securing CWB a strong position in the grain marketing supply chain," said CWB president and CEO Ian White in a statement.
Mission Terminal Thunder Bay stores 136,500 tonnes of grain, while Les Elevateurs des Trois-Rivieres can store 110,000 tonnes.
The deal is not surprising, said analyst Chuck Penner of LeftField Commodity Research, given the CWB's established working relationship with Mission Terminal, which is led by former Wheat Board Chief Executive Adrian Measner.
"There really aren't that many small players for them to pick off," Penner said. "They have limited opportunities that way."