Glencore International plc and Viterra Inc. have signed a definitive agreement pursuant to which Glencore has agreed to acquire all of the issued and outstanding shares of Viterra for C$16.25 per share in cash by way of a court approved plan of arrangement.
The acquisition of Viterra is consistent with Glencore's 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.
Chris Mahoney, director of agricultural products of Glencore said, "The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets. 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."
Mayo Schmidt, Viterra's president and CEO said, "Viterra employees created a world-class agri-business, of which I am very proud. 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."
Benefits to Canadian Grain Farmers
Glencore is confident the acquisition of Viterra will deliver significant overall benefits to grain farmers. The transaction will give farmers access to Glencore's unparalleled global distribution channels and increase their ability to export their product into international grain and oilseeds markets. Glencore's global reach and expertise will provide farmers with strong protection from market volatility, more options to market their grain and oilseeds and more competitive pricing resulting from Glencore's wider markets access and its more consistent demand for grains and oilseeds.
Glencore's logistics network enables it to deliver grain and oilseeds to more regions more efficiently, and its balance sheet strength enables the company to buy greater volumes. This results in a more consistent demand profile and therefore greater pricing continuity for farmers.
As a result of the asset sale agreements Glencore has entered into with Agrium Inc. ("Agrium") and Richardson International Limited ("Richardson International"), the transaction is expected to result in the creation of a more robust competitive landscape for Canadian farmers. As appropriate, Glencore also intends to grant third party access to its handling infrastructure at prevailing market rates.
More information for farmers can be found at www.glencore.com/agricultural-products.php.
Agreements with Agrium and Richardson International
Glencore has entered into agreements with each of Agrium and Richardson International, which provide for the sale of certain assets of Viterra including assets which comprise a majority of Viterra's existing Canadian operations. The purchase of Viterra is not conditional on Glencore's agreements with Agrium or Richardson International being completed.
Agrium will acquire the majority of Viterra's retail agri-products business including its 34 percent interest in Canadian Fertilizer Limited ("CFL") for which Agrium will pay C$1.8 billion in cash, subject to specified purchase price adjustments, including payment for working capital.
Richardson International will acquire 23 percent of Viterra's Canadian grain handling assets, certain agri-centres and certain processing assets in North America for C$0.8 billion in cash, subject to specified purchase price adjustments, including payment for working capital.
Glencore's agreements with Agrium and Richardson International will be described in the information circular to be mailed to all Viterra shareholders in connection with the transaction and the agreement with Agrium will be filed on SEDAR under Agrium's profile at http://www.sedar.com/.
Commenting on the deal, Mike Wilson, Agrium's chief executive officer said, "The proposed transaction is an excellent fit with Agrium's stated strategy of growing across the value chain, allowing us to grow both our Retail and Wholesale operations. We believe that our Crop Production Services Retail business can provide significant value for Canadian farmers and that this opportunity will provide growth in a market where we currently have a limited retail presence."
"Our agreement with Glencore will enhance both our grain handling and processing capacities, and help meet the growing needs of farmers in Western Canada. This expansion of our operations is consistent with our focus on growing our business while nurturing strong relationships with our customers, suppliers and communities," added Curt Vossen, President of Richardson International.