Commodity marketing and mining giant Glencore International is to spend nearly four billion pounds on the issued and outstanding shares of Viterra, the Canadian agri-business and food ingredients firm.
Glencore, which is currently in the process of a mammoth tie-up with FTSE 100 peer Xstrata, said it would pay C$16.25 in cash per Viterra share, representing an "attractive premium to Viterra shareholders" (a premium of 48% over the Viterra's closing price on March 8th, the day before it announced it had received expressions of interest). The transaction has already received the unanimous approval of Viterra's board.
The deal, which values Viterra at C$6.1bn (£3.9bn) on a fully diluted basis, establishes a key growth platform for Glencore in Canada and will expand its operations in Australia, Glencore said in a statement.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"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," the firm said.
"Viterra's tier one 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."
Glencore has entered into agreements with agri-business firms Agrium and Richardson International to sell off some of the assets that it will take over as a result of the acquisition.
Agrium will buy to majority of Viterra's retail agri-products business, including its 34% interest in Canadian Fertilizer Limited, for C$1.8bn in cash. Meanwhile, Richardson will purchase 23% of Viterra's Canadian grain-handling assets, certain agri-centres and certain processing assets in North America for C$0.8bn.
Glencore assured that the purchase of Viterra does not depend on these smaller sales being completed.
The company said that its proposed merger with Xstrata is separate and will have no impact on the transaction.
Shares in Glencore were down 1.84% at 412.7p following the announcement, outperforming the wider mining sector which was 3.47% lower on the back of concerns over the Chinese economic outlook.
BC
-
RICS: Housing market subdued in May but outlook brightens as sales stabiliseThe property market lost momentum after April’s stamp duty hike, but sentiment is improving
-
The most underrated places to buy a home in the UKHouse prices tend to be sky-high in some of the most desirable parts of the UK. We look at ten underrated areas which boast great amenities without an outsized price tag.
