Not content with pursuing a £60 billion merger with Xstrata, Glencore International is poised to make a £4 billion bid for a Canadian grains trader.
The world’s biggest commodities trader is understood to be preparing a bid for Viterra in partnership with Agrium, a fertiliser producer, and Richardson International, a private grains group.
This consortium is likely to be bidding against Archer Daniels Midland (ADM) as the groups vie for control of the Canadian agricultural sector. The timing is awkward for Glencore because the company is trying to persuade investors that they should accept a proposed merger with Xstrata, which would create one of the world’s largest mining groups However, Ivan Glasenberg, the Glencore chief executive, is not the sort of man to be distracted from his other targets while the Xstrata process continues. He has wanted to expand Glencore’s agricultural division for some time and a potential deal with Louis Dreyfus, the French grains trader, collapsed last year.
Glencore declined to comment on the possibility of a joint bid for Viterra yesterday but market rumours suggest that a formal offer could be made within days.
Viterra’s share price rose by C$1.44, or 9.8 per cent, to close at C$16.09 in Toronto yesterday as investors speculated that a bidding war was about to begin. The company revealed last Friday that it had received an approach from a possible bidder.
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Glencore and ADM are trying to position themselves to take advantage of the liberalisation of the Canadian agricultural sector this year.
The Canadian Wheat Board traditionally controlled the country’s grains trade but the Government has ruled that the monopoly must end by August.
Glencore’s three-way partnership would entail the Swiss-based commodities group taking on Viterra’s trading business while Agrium would acquire the fertiliser business and Richardson would buy the food-processing division.
Glencore’s agricultural division, based in Rotterdam, lost $47 million last year after a bet on cotton prices went the wrong way. The year before it generated profits of $717 million.
The company’s share price closed down 2.75p to 410.6p in London yesterday.