Fertilizer Markets and Finance

Swiss commodity supplier Glencore International obtained approval from the Canadian federal government on Sunday for its application to buy up Canadian agribusiness titan Viterra Inc., bringing the $6.1 billion deal that much closer to completion.

Canadian Industry Minister Christian Paradise approved the bid under the Investment Canada Act, saying in a press release that the deal “is likely to be of net benefit to Canada” and lauding Glencore for its “commitments to Canada.”

The approval is not without controversy, however, with Deputy Liberal Party leader Ralph Goodall criticizing the Harper Conservatives for “rubber-stamping” the foreign buy-out of a key Canadian company on the sly.

The deal currently awaits approvals from relevant authorities in China, New Zealand and Australia, with some suggesting that it may not meet its deadline if China’s Ministry of Commerce does not give the go ahead on schedule.

Glencore plans to ramp up Viterra’s planned capital spending in Canada by more than $100 million over a five year period, and has stated that it will support grain industry undertakings in Manitoba.

Viterra’s Regina head office is also slated to remain the headquarters of the company’s North American agricultural operations.

Glencore International PLC’s (LSE:GLEN.L - News) takeover of Viterra Inc (Toronto:VT.TO - News) may close in August, slightly later than expected, the chief executive ofAgrium Inc (Toronto:AGU.TO - News) (NYSE:AGU - News) said on Wednesday, but a source close to Glencore said the company is still working toward closing the deal in July.

The C$6.1-billion ($5.9 billion) takeover requires the Canadian government’s approval, and a competition review of Glencore’s side deals to sell some assets to Agrium and Richardson International Limited will begin after Glencore’s transaction closes, Agrium CEO Mike Wilson told the company’s investors in Chicago.

“We were hoping (Glencore) would close in July, it might drag into August,” Wilson said, who did not say why he thinks the Glencore-Viterra deal might be delayed.

“Can’t wait to get Viterra into the fold.”

Agrium would acquire 232 of Viterra’s Canadian farm-supply outlets, 17 farm outlets in Australia and a minority stake in the Canadian Fertilizers Limited (NYSE:CF - News) plant at Medicine Hat, Alberta, for C$1.15 billion ($1.12 billion).

Read more at Yahoo Finance

The last vestiges of Canada’s iconic farm co-operatives will likely head toward extinction Tuesday when shareholders of Viterra Inc.(VT-T16.02-0.01-0.06%) vote on a takeover bid from Swiss-based Glencore International Inc.

Viterra’s roots go back nearly 100 years to the days when farmers across the prairies banded together to sell their grain. That led to the creation of the Saskatchewan Wheat Pool, which, after some acquisitions, became Viterra in 2007.

Today, Viterra is Canada’s largest grain handling company with operations in Australia and the United States. It also runs a chain of 258 retail stores across Western Canada selling farm supplies.

Glencore, which is better known as a global commodities trader, made an all-cash offer for Viterra in March worth $16.25 a share, or $6.1-billion in total. To make its bid more palatable to Canadian regulators, Glencore struck side deals with Winnipeg-based Richardson International and Calgary-based Agrium Inc. Under those deals, Richardson will purchase 19 of Viterra’s 92 Canadian grain elevators and Agrium will acquire most of Viterra’s retail stores.

Read more at The Globe and Mail

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Glencore International Plc (GLEN)’s proposed C$6.1 billion ($6.1 billion) takeover of Viterra Inc. (VT) may reduce competition in retail fertilizer sales, according to a report prepared for the Saskatchewan government.

Glencore’s acquisition of Canada’s largest grain handler includes a side deal to sell 90 percent of Viterra’s domestic retail outlets to Agrium Inc. (AGU), a Calgary-based fertilizer producer that is already North America’s largest farm retailer.

“There is some concern about competition in the farm input sector –- particularly regarding nitrogen fertilizers –- due to the acquisition of most of Viterra’s retail input facilities by Agrium,” according to a summary of the report by Informa Economics Inc., a Memphis, Tennessee-based independent research company, that was released today.

The report says that Glencore’s purchase of Regina, Saskatchewan-based Viterra will initially have “minimal impact” on competition in grain handling and the only job losses will be limited to head-office employees. Regarding the sale of the retail assets to Agrium, Informa says there is no evidence the company would take “anticompetitive actions.”

“If Agrium’s retail and wholesale business units were coordinated in the future, the firm might have the ability to sustain price increases in some locations,” according to the report. “Thus, there is some concern about competition.”

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WINNIPEG, Manitoba (Reuters) - Glencore International PLC said on Friday that Canada’s Competition Bureau will not stand in the way of its C$6.1-billion (3.79 billion pounds) takeover bid for topCanadian grain handler Viterra Inc .

The Competition Bureau decision removes one of two major regulatory obstacles to one of the biggest deals in years in the agricultural sector.

Swiss-based Glencore said in a press release that it received a letter on Thursday from the bureau, which operates independently of the government, saying it would not oppose the takeover.

The deal still needs the approval of the Canadian government because it is a foreign takeover. It must also be approved by Viterra shareholders.

Read more at Yahoo News

No middleman in the industrialized world is offering potential buyers a cheaper way to export wheat to Asia than Australia’s GrainCorp Ltd. (GNC)

While Glencore International Plc’s purchase of Viterra Inc.’s grain assets in Australia andCanada this month helped spur an 11 percent jump in GrainCorp’s shares on takeover speculation, the Sydney-based wheat handler still traded yesterday at 10.7 times profit, according to data compiled by Bloomberg. That’s the lowest among agricultural product wholesalers valued at more than $500 million in developed economies. It’s also a 57 percent discount to Glencore’s bid of 24.9 times earnings for Viterra, the data show.

GrainCorp, which operates seven of the eight ports that ship grain in bulk from Australia’s east coast, has tripled its sales since the world’s second-largest wheat exporting nation began deregulating the industry in 2006, and is projected by analysts to report record profit this year. A takeover offer is “inevitable,” according to Citigroup Inc., and GrainCorp could lure a bid of A$2.2 billion ($2.3 billion), 23 percent more than yesterday’s close, RBS Morgans Ltd. said.

Read more at Bloomberg

Canada’s farm minister highlighted on Monday the global marketing reach of Swiss-based Glencore in the latest sign from Ottawa that it has little appetite for blocking the company’s proposed takeover of grain handler Viterra.

Canada is one of the few countries that can help meet growing global demand for food, which is set to increase by 50 to 70 per cent in coming decades, Agriculture Minister Gerry Ritz told reporters when asked to comment on the Glencore bid.

“It’s going to take trade at the global level to make that happen. Certainly companies like Glencore have different avenues of marketing than Viterra has,” he said on a conference call from South Korea .

Ritz said Viterra, the country’s biggest grain handler, itself has operations in several countries and is “not simply a Canadian company either.”

Read more at Edmonton Journal

Glencore International Plc (GLEN) has learned from BHP Billiton Ltd. (BHP)’s experiences in handling takeovers in Canada.

Glencore, the largest publicly traded commodity supplier, will probably win Canadian approval for its C$6.1 billion ($6.2 billion) agreement to buy Viterra Inc. (VT) because it brought in partners including Calgary-based Agrium Inc. (AGU) to avoid a repeat of BHP’s failed bid for Potash Corp. of Saskatchewan Inc.

The Glencore deal was done amid concerns that Prime Minister Stephen Harper’s governing Conservatives are wary about foreign ownership of Canadian resource companies. The government rejected a $40 billion hostile bid for Potash Corp. in 2010, saying the proposal for the world’s largest potash miner didn’t provide a “net benefit” for Canada.

Read more at Bloomberg