Grain handler Viterra (TSE:VT) has agreed to be acquired by Swiss-based Glencore International (LON:GLEN) in a $6.1-billion deal that will see two Canadian firms pick up major segments of Viterra's business.
Glencore, a global commodities trader, will pay $16.25 per share for Viterra, a 48 percent premium to the Candian grain handler's closing price on March 8, the day before it first disclosed it had been approached by potential buyers.
"The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets," said Glencore's director of agricultural products Chris Mahoney.
Under the agreement, Agrium is acquiring the majority of Viterra's retail agriproducts business including its 34 percent interest in Canadian Fertilizer for $1.8 billion while Richardson will pay $800,000 for 23 percent of Viterra's Canadian grain handling assets, as well as certain agricentres and processing assets in North America.
Agrium president and CEO Mike Wilson said: "We believe our crop production services retail business can provide significant value for Canadian farmers and that it provides an opportunity for growth in a market where we currently have a limited retail presence."
Tuesday's deal may aid Glencore achieve its goal of increasing its exposure to grain, as economic growth in China and other emerging economies fuels food demand.
Glencore's Canadian deal comes at the same time it's trying to complete the larger $90 billion merger with miner Xstrata (LON:XTA).
Part of the deal includes keeping Viterra's head office in Regina, Saskatchewan which may tick the "net benefit" box as Ottawa scrutinizes a deal that falls into the purview of the Investment Canada Act.
The Investment Canada Act is a vital step Glencore needs to pass in order to seal its $6.1 billion deal.
In 2010, the Canadian government rejected BHP Billiton's (ASX:BHP) bid to accquire Potash Corp. of Saskatchewan (TSE:POT)(NYSE:POT), after the Saskatchewan provincial government raised objections to the deal.
Last week, Saskatchewan Premier Brad Wall said a major factor in whether he would back a foreign bidder for Viterra would be whether the company's headquarters would stay in provincial capital Regina.