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Glencore agrees $6.2BN deal to buy Canadian grain giant Viterra

Glencore, the biggest commodities trading firm on the planet, is to buy Viterra, Canada’s largest handler of grain, for $6.2 billion, marking the start of the Swiss trading house's expansion into agricultural commodities.

Glencore viterra 2012 03 20Enlarge
Glencore, which already markets and produces crops as well as trading metals, crops and fuels in the financial market, has earmarked agricultural commodities as an area for growth. (FABRICE COFFRINI/AFP/Getty Images)

LONDON, United Kingdom – Glencore, the world’s biggest commodities trading company, is to buy Viterra, Canada’s largest handler of grain, for $6.2 billion, the companies announced Tuesday, signalling the beginning of Glencore’s expansion into agricultural commodities.

Glencore, based in Baar, Switzerland, will pay C$16.25 a share for Viterra, which is headquartered in Regina in the rural province of Saskatchewan and owns port and storage facilities in western Canada, The Daily Telegraph reports.

It is the country’s leading handler of spring wheat, oats, barley and canola. Since announcing it had received a takeover approach earlier this month, Viterra has been the focus of a takeover battle, with New York-listed agricultural commodity traders Archer Daniels Midland and Bunge also interested in buying the company, according to The Financial Times.

The $6.2 billion price-tag for Viterra is almost 50 percent more than the firm was worth on March 8, the day before it announced it had received expressions of interests from third parties, according to the BBC.

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Glencore, which already markets and produces crops as well as trading metals, crops and fuels in the financial market, has earmarked agricultural commodities as an area for growth. It commanded almost 9 percent of the global grain market at the time of its public share offering last May, according to Reuters.

“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,” the company said in a statement.

Chris Mahoney, the company’s agricultural head, said Glencore was also attracted by Viterra’s assets, and aims to push into the US through further acquisitions, using Regina as its North American base.

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Glencore has two partners in the deal. Fertilizer supplier Agrium and grain handling firm Richardson are to buy most of Viterra’s Canadian business for a total of $2.6 billion, Bloomberg reports.

The company is currently in the process of trying to merge with mining group Xstrata to create a new company, Glencore Xstrata International PLC, with a market value of almost $90 billion. That deal is not yet guaranteed, however, with several leading Xstrata shareholders voicing opposition to the proposed terms of the combination.

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http://www.globalpost.com/dispatch/news/business-tech/120320/glencore-agrees-62bn-deal-buy-canadian-grain-giant-viterra