GENEVA (AP) — Swiss-based commodities firm Glencore International PLC agreed Tuesday to buy Canada's largest grain handling company Viterra Inc., in a deal valued at 6.1 billion Canadian dollars ($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 CA$2.6 billion in cash, it said.
The announcement comes a day after Viterra revealed it was in exclusive talks with a potential buyer.
Glencore said it will buy all shares of Viterra for CA$16.25 per share in cash, a premium of about 50 percent 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.
Shares in Glencore were down 2.3 percent at 411 pence in afternoon trading in London.
Glencore is already one of the world's biggest traders in raw materials, such as coal, cotton and corn. Last year, Glencore underwent a $10 billion IPO and it recently announced plans for a $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.
"We don't expect any problems with regulatory approval. There is a large Canadian component to our proposal. I really don't expect any issues," Mahoney said.
Mahoney said they are committed to Regina, Saskatchewan, as Viterra's North American head office and said there will be net benefit to Canada because they will invest to expand operations in the country if there's a need.
He said they are keeping the majority of the Canadian storage and port facilities and will keep almost all of Viterra's assets in Australia.
Mahoney said the Viterra deal will have no impact on the Xstrata deal.
Mayo Schmidt, Viterra's president and CEO, said the sale concludes a long public sale process that included many potential buyers including the largest agriculture and food companies in the world. He said Glencore offered a significant premium relative to the sector.
"All the parties we're given ample opportunity to put their best foot forward," Schmidt said. "Glencore offered the greatest benefits for Viterra and its employees and the countries in which we operate."
Shares of Viterra were down five cents at $15.92 Canadian in late morning trading on the Toronto Stock Exchange.