Swiss mining and commodities trader Glencore International plc (GLEN.L GLNCY.PK, GLCNF.PK) has made a 3.5 billion pound or $5.49 billion takeover bid for Canada's biggest grain handler Viterra Inc. (VT.TO, VTA.AX), according to a report in the Sunday Telegraph.
The report noted that the bid by Glencore triggered Viterra's response, which said on Friday that it received expressions of interest from third parties.
Trading in Viterra's stock was halted on the Toronto Stock Exchange on Friday ahead of the announcement. The shares gained nearly 24 percent after trading resumed, boosting the company's market capitalization to more than C$5 billion.
Glencore, already in the midst of a $90 billion merger with Swiss mining company Xstrata Plc (XTA.L), is said to be keen on acquiring Viterra in an effort to boost its agricultural business in North America. Glencore's agricultural business had sales of $17.10 billion in 2011, up 64 percent from the prior year.
Viterra currently controls 45 percent of Canada's grain handling market. Glencore's bid comes even as Viterra expects higher profits once the Canadian Wheat Board's long-running grain marketing monopoly ends in August 2012. The Canadian government has passed a law, ending the Canadian Wheat Board's monopoly on marketing wheat and barley grown in Western Canada.
On Thursday, Viterra reported a 23 percent decline in profit for the first quarter, reflecting lower earnings at its grain handling and marketing segment. Revenues for the quarter grew 53 percent from the year-ago period.
However, Viterra said it remains confident that as of August 1, 2012, producers in Western Canada will benefit from the ability to market their wheat, durum and barley to buyers of their choice. In fiscal year 2014 and beyond, Viterra anticipates its annual earnings before income taxes, depreciation and amortization or EBITDA to increase by C$40 million to C$50 million per year.
Viterra was formed in 2007 as a publicly traded corporation when the Saskatchewan Wheat Pool acquired Agricore United. Alberta Investment Management Corp. is the company's largest shareholder with an approximately 16 percent stake.
GLEN.L closed Friday's trading on the LSE at 408.70 pence, up 3.60 pence or 0.89 percent on a volume of 5.61 million shares.
VT.TO closed Friday's trading at C$13.58, up C$2.60 or 23.68 percent on a volume of 15.52 millions shares.
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