Viterra shares rise on takeover speculation

Shares in Regina-based Viterra continued to climb Tuesday amid speculation that more than one bidder may have Canada's biggest grain handler in their takeover sights.
Viterra has 45 per cent of the market for shipping and processing Canadian grain. (Viterra)

Shares in Regina-based Viterra continued to climb Tuesday amid speculation more than one bidder may have Canada’s biggest grain handler in their takeover sights.

Its stock closed up 28 cents, or two per cent, at $14.73 on the Toronto Stock Exchange. More than 11.6 million shares changed hands, eight times the usual volume.

It shares have risen by one third in three trading days.

The British Sunday Telegraph reported that Glencore International, the world’s largest stock-exchange listed commodities supplier, has made a $5.5 billion offer and the Wall Street Journal reported, also on Sunday, that Cargill Inc. was interested.

Analysts have suggested offers might also come from Calgary-based fertilizer producer and farm supply retailer Agrium, as well as U.S. agricultural interests Bunge or Archer Daniels Midland Co.

On Friday, Viterra confirmed "expressions of interest" from third parties, but has declined to make any comment beyond that.

There could be a bidding war, Taylor Cope, an analyst with Chicago-based investment bank William Blair, told CBC News.

"To the extent that this asset is in play, there's always the chance that another bidder who doesn't want to lose the potential to own this very unique, this very attractive asset takes the opportunity to come in with a higher bid," he said.

UN predicts food demand to grow 70% by 2050

Viterra has 45 per cent of the Canadian market, and faces the opportunity to greatly expand that with Ottawa’s move to end the Canadian Wheat Board’s monopoly over wheat and barley sales on August 1.

CEO Mayo Schmidt predicted Thursday that the end of the Wheat Board’s monopoly will lead Viterra to boost annual earnings by 25 per cent to $50 million by 2014.

It faces opportunity not only in the lifting of the Wheat Board’s monopoly, but also in the expected increase in demand for food.

The United Nations Food and Agriculture Organization has estimated that world food output must increase 70 per cent to meet the needs of a global population which it predicts will grow from seven billion now to nine billion by 2050.

But a takeover might also revive the kind of political debate that arose in November 2010 with the $40 billion US hostile takeover offer for Potash Corporation of Saskatchewan, the world’s biggest fertilizer company, by Australian miner BHP Billiton. 

Ottawa rejected that attempt following stiff opposition by Saskatchewan Premier Brad Wall, several other provinces and by PotashCorp itself.

Yesterday Wall said Viterra Inc. does not fit the province's definition of a strategic resource, but that the fiscal and economic impacts of a potential takeover of the Regina-based grain handler must be analyzed.

The premier said Ottawa would need to determine if any Viterra takeover would be of net benefit to Canada and Saskatchewan, but noted that it's different from PotashCorp because it doesn't involve a strategic resource.

Viterra, formerly the Saskatchewan Wheat Pool, changed its name in 2007 after taking over larger competitor Agricore United. It processes and ships grain and sells supplies to farmers.

With files from The Canadian Press