Viterra soars on takeover interest

Shares of Viterra Inc. jumped Friday after Canada's largest publicly-traded grain handler disclosed it was the subject of takeover interest.
Viterra says it it has 'received expressions of interest' from unnamed third parties. (Troy Fleece/Canadian Press)

Shares of Viterra Inc. jumped Friday after Canada's largest publicly-traded grain handler disclosed it was the subject of takeover interest.

Its stock closed with a gain of $2.60, or close to 24 per cent, at $13.58 on the Toronto Stock Exchange on a volume of 15.5 million shares — nearly 20 times the normal daily volume.

The firm, with corporate offices in Calgary and Regina, said it has "received expressions of interest" from unnamed third-parties.

No other details were released by the company, which said it was making the announcement "in view of market activity in Viterra's shares."

"A further announcement will be made if appropriate," the company said.

A deal to buy the firm could be worth more than $5 billion, based on its stock price.

Viterra has been expecting to benefit from a law passed late last year to end the Canadian Wheat Board's monopoly over the marketing of wheat and barley.

Soon after the bill was passed, Viterra began taking bids from farmers to sell their grain starting in August, and in an interview Thursday CEO Mayo Schmidt said interest has been strong so far.

In the financial year that begins Nov. 1, 2013, and beyond, Viterra has said it anticipates a $40-million to $50-million boost to annual profits before interest, taxes and other items.

Viterra was formed by the merger of the Saskatchewan Wheat Pool and Agricore United.

Viterra shares soared after the trading halt was lifted.

It is a global agri-business with operations across Canada, the United States, Australia, New Zealand and China, as well as a growing international presence elsewhere.

It operates three distinct business segments: grain handling and marketing, agri-products and processing.

The news comes a day after the company released its results for its most recent quarter, in which it posted a 23 per cent drop in net earnings to $77.7 million.

On a per-share basis, profits were 21 cents per share, versus $100.7 million, or 27 cents per share, during the same period a year earlier.

The earnings came in roughly in line with the 20 cents per share analysts polled by Thomson Reuters had been expecting.

Consolidated revenue was $3.56 billion, up from $2.33 billion in the same prior-year period, a 53 per cent increase due mainly to its grain handling and marketing segment.

The prospect of a potential takeover did not come up during Viterra's conference call with analysts Thursday. If anything, the market was curious whether Viterra would make any acquisitions of its own. It offered no comment on whether it would make a play for Gavilon Group, a U.S. energy, grain and fertilizer trader that has put itself on the block.

In an interview Thursday, CEO Mayo Schmidt said the company's focus is on growing organically and improving its existing system.

"At least for now, unless something special were to change, that would be our focus — continued new improvements of the efficiencies of the system that we have today," Schmidt said.

With files from The Canadian Press