Reuters: Regulatory News: UPDATE 2-Shareholders back Glencore takeover of Viterra

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UPDATE 2-Shareholders back Glencore takeover of Viterra May 29th 2012, 18:15 Tue May 29, 2012 2:15pm EDT * Deal still needs Canada, Australia regulator OK * Agrium, Richardson to gain some assets By Scott Haggett and Rod Nickel CALGARY, Alberta/WINNIPEG, Manitoba, May 29 (Reuters) - S hareholders of Canada's largest grain handler, Viterra Inc , voted overwhelmingly on Tuesday in favor of a friendly takeover bid by Swiss commodities trader Glencore International Plc, pushing the biggest deal in years for the global agricultural sector closer to reality. The deal was supported by 99.8 percent of shareholders, far more than the required two-thirds majority. Glencore offered Viterra C$16.25 per share, or C$6.l billion ($5.9 billion) in March for the company, which owns the biggest share of Western Canada's grain storage and farm supply outlets, as well as nearly all grain storage capacity in South Australia. The acquisition, which still needs regulator approval in Canada and Australia, would bring Glencore into the big leagues of global agriculture, which are dominated by Archer Daniels Midland Co, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp, the so-called ABCD quartet of the industry. In Canada and Australia, where Viterra is strong, "ADM, Bunge and Cargill will take notice of Glencore," said Horst Hueniken, a former analyst based in Toronto who is working to launch a global agricultural hedge fund. "The other concern will be that Glencore will continue to grow and start penetrating markets beyond Canada, parts of the U.S. and Australia," he said. Glencore's move comes in one of the busiest merger and acquisition periods for agriculture since the late 1990s as improving diets and incomes in countries like China and India stoke interest in grain companies. Japanese trading house Marubeni Corp on Tuesday swooped in to buy U.S.-based Gavilon Group for $3.6 billion. The growing use of corn and other crops to make biofuels has tightened supplies of food crops for the past four years or so, Hueniken said, making agriculture a likely space for further deal activity. "The economics are not marginal anymore. It's become a space where merging or acquiring makes sense." Viterra has been quietly up for auction since late 2011, with approaches made by four bidders, including Glencore, according to public company documents. On Monday, Russian investment group Summa bought a nearly 50 percent stake in Russian state grain trader United Grain Co (UGC), while Louis Dreyfus is also looking to tap capital markets for the first time. Canada is the biggest exporter of canola, spring wheat and oats. Glencore would get most of Viterra's country and port grain storage in Western Canada, along with some food processing assets, and its grain storage and handling assets in South Australia. Glencore has also cut side deals to sell some of Viterra's assets to two Canadian companies, Agrium Inc and Richardson International Ltd, in a move to win political support in Ottawa. The end of the Canadian Wheat Board's monopoly over Western Canada's wheat and barley sales is expected to boost profits for grain handlers, who will be able to buy directly from farmers for the next harvest. Viterra shares were down 1 Canadian cent at C$16.02 in Toronto, suggesting that investors still see some risk that the deal may not be completed. Glencore shares in London were up 2.4 percent at 351.55 pence, while Agrium stock climbed 2.5 percent to C$81.82 in Toronto, little changed from their levels before the vote result. Canada's independent Competition Bureau has already said it will not oppose Glencore's takeover of Viterra, but has not ruled on Glencore's side deals with Agrium and Richardson. Approval would also be needed from the Canadian government, which decides whether large foreign takeovers are of net benefit to the country, and from the Australian Competition and Consumer Commission. The deal is expected to close by the end of July. Link this Share this Digg this Email Reprints

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