World Grain - April 2012 - 10

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Glencore to buy Viterra for C$6.1 billion
BAAR, SWITZERLAND — Glencore International P.L.C., one of the largest publicly-traded commodity suppliers in the world, announced on March 20 that it has agreed to acquire Regina, Saskatchewan, Canada-based Viterra Inc. for C$6.1 billion ($6.15 billion). Under terms of the agreement, Glencore said it will pay C$16.25 a share for all the issued and outstanding shares of Viterra. The transaction price represents a premium of 48% over Viterra’s closing price of C$10.98 on March 8, the day prior to Viterra’s announcement that it had received interest regarding a potential transaction. Along with Glencore, it had been rumored in media reports that Archer Daniels Midland, Richardson, Agrium, and Cargill were interested in Viterra. The end of Canada’s single desk grain marketing monopoly has resulted in a ﬂurry of interest in the region. “The acquisition of Viterra reﬂects our strong belief in the importance and future potential of the Canadian and Australian grain markets,” said Chris Mahoney, director of agricultural products at Glencore. “This is an exciting opportunity to deliver the real beneﬁts that can be generated through the combination of Glencore’s and Viterra’s respective assets, people and know-how to both farmers and customers in Canada, Australia and further aﬁeld.” Glencore said it is conﬁdent the acquisition of Viterra will deliver “signiﬁcant overall beneﬁts to grain farmers.” Glencore said it will consolidate Viterra’s executive ofﬁces in Saskatchewan and make the Regina ofﬁce the platform for its North American agricultural operations and for expansion into the United States. Additionally, Glencore said it will contribute to wheat research and global food security initiatives in Western Canada’s research institutions, and will increase Viterra’s funding to other Western Canadian agricultural and educational institutions. In Australia, the addition of Viterra’s operations is expected to further Glencore’s operational and commercial advantages by driving synergies and efﬁciencies for the beneﬁt of Australian growers at the local level. Also as part of the transaction, Glencore has agreed to sell certain assets of Viterra to Agrium Inc. and Richardson International Ltd. Agrium has agreed to buy the majority of Viterra’s retail agri-products business, including its 34% interest in Canadian Fertilizer Ltd. for about C$1.8 billion, while Richardson International will acquire 23% of Viterra’s Canadian grain handling assets, certain agri-centers and certain processing assets in North America for about C$800 million. Commenting on the deal, Mike Wilson, Agrium’s CEO said, “The proposed transaction is an excellent ﬁt with Agrium’s stated strategy of growing across the value chain, allowing us to grow both our Retail and Wholesale operations. We believe that our Crop Production Services Retail business can provide signiﬁcant value for Canadian farmers and that this opportunity will provide growth in a market where we currently have a limited retail presence.” “Our agreement with Glencore will enhance both our grain handling and processing capacities, and help meet the growing needs of farmers in Western Canada. This expansion of our operations is consistent with our focus on growing our business while nurturing strong relationships with our customers, suppliers and communities,” said Curt Vossen, president of Richardson International.

JSE introduces wheat futures under license from KCBT
JOHANNESBURG, SOUTH AFRICA — The Johannesburg Stock Exchange (JSE) conﬁrmed on March 19 its plans to introduce a new foreign-referenced wheat contract to its existing portfolio of international soft commodities. The cash-settled futures contract, based on hard red winter wheat, will reference the Kansas City Board of Trade’s (KCBT) benchmark settlement prices. For the JSE, the beneﬁt of offering this contract is that hard red winter wheat is similar in type and milling quality to South Africanproduced wheat, which means local market participants can consider this alternative product for price risk management purposes speciﬁc to their wheat exposure. “We are very pleased to be working with the Kansas City Board of Trade, which celebrates its 156th anniversary this year. Not only do they have a wealth of experience, we also share their commitment to integrity and service for the market we serve. This also represents a further step toward globalizing South Africa’s commodity markets,” said Chris Sturgess, director, Commodities at the JSE. “The Kansas City Board of Trade is proud to be partnering with the Johannesburg Stock Exchange to provide their market users access to our Hard Red Winter wheat futures contract, the global benchmark
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for bread wheat pricing. JSE’s respected position in global commodities trade made the idea of working with JSE quite appealing. This is KCBT’s ﬁrst such license agreement with an overseas exchange, and we are pleased that it is with our friends at JSE,” said KCBT President and Chief Executive Ofﬁcer Jeff Borchardt. The contract was introduced for trading on March 28, with expiry dates in July, September, and December this year and then also March 2013. This is the second foreign-referenced wheat contract to be offered by the JSE, with the exchange listing the ﬁrst international wheat contract under license from the CME Group in July 2011. “As our local wheat contract is the JSE’s second most liquid agricultural product and while volumes in our foreign-referenced contracts remain strong, this additional wheat contract should be well received by traders. Offering three wheat contracts enables traders not only the choice on which product to hedge their wheat price risk but also through our electronic trading system the functionality to trade the spread between the various markets. This should complement volumes across all three product types,” said Sturgess. With a contract size of 50 tonnes, the product mirrors the existing wheat contracts traded on the JSE.
April 2012 / World Grain / www.World-Grain.com

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World Grain - April 2012

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