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Glencore to buy Canada's Viterra

Published:Friday | March 23, 2012 | 12:00 AM

Swiss-based commodities firm Glencore International Plc agreed Tuesday to buy Canada's largest grain handling company Viterra Inc, in a deal valued at Cdn$6.1 billion (US$6.14 billion).

Glencore will immediately sell the majority of Viterra's Canadian assets and certain other businesses to Canadian-based companies Agrium and Richardson International for about Cdn$2.6 billion in cash, it said.

Glencore said it will buy all shares of Viterra for Cdn$16.25 per share in cash, a premium of about 50 per cent over its trading value before the first word of a possible deal emerged March 8.

"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," said the company based in Baar, Switzerland.

Chris Mahoney, director of Agricultural Products of Glencore, said on a conference call with reporters in Canada that prior to this deal Glencore had very little in North America and said it would have been very difficult for them to grow organically. He called Viterra a very asset-rich company.

The sale comes as Viterra is poised to benefit from the end of the Canadian Wheat Board's monopoly on the marketing of wheat and barley in Canada.

Glencore is already one of the world's biggest traders in raw materials, such as coal, cotton and corn.

Last year, Glencore underwent a US$10-billion IPO and it recently announced plans for a US$90-billion merger with Anglo-Swiss mining group Xstrata Plc.

Canadian authorities will examine whether the takeover of Viterra is a "net benefit" to Canada. They have previously blocked Glencore rival BHP Billiton's takeover of Potash Corp because of concerns.

Mahoney said the Viterra deal will have no impact on the Xstrata deal.

- AP