Grain Handler Viterra gets Takeover bid from Glencore, report says (VT.tsx; GLEN.L)

From the Canadian Broadcasting Corporation:

Cargill also said to be interested
Viterra Inc., Canada's largest publicly traded grain handler, has received an offer from Swiss commodities firm Glencore PLC, according to a media report.

The Sunday Telegraph in Britain, citing unnamed sources, says Glencore's bid is worth $5.5 billion.

The reports come after Viterra confirmed Friday that it has received "expressions of interest," but did not name the pursuer. Glencore declined to provide any comment on the reports to The Canadian Press on Monday morning.

Meanwhile, the Wall Street Journal reported that U.S. agribusiness Cargill Inc. was also one of the groups interested in buying Viterra, citing unidentified sources familiar with the matter.

The potential bids comes as Viterra is poised to benefit from the end of the Canadian Wheat Board's long-running monopoly on the marketing of wheat and barley.

Viterra had initially denied last week that it was weighing any offers, but followed it up shortly afterwards with the confirmation on Friday, "in view of market activity in Viterra's shares."...MORE 

Also in play:
Glencore, Bunge Eye Sale of Soros-backed Gavilon

"Bunge to merge with Viterra to form $18 billion agriculture trader"

Although not nearly as large as  Cargill you can be sure that this tie-up has raised some concerns at the "Grain merchant to the world."

From Reuters via Yahoo News, June 13:

U.S. grains merchant Bunge and Glencore-backed Viterra on Tuesday announced an $18 billion deal to merge, creating one of the world's largest agriculture trading firms.

The deal brings Bunge closer in global scale to leading rivals Archer-Daniels-Midland and Cargill and will be examined closely by antitrust regulators.

Bunge is already the world's largest oilseed processor and analysts said it and Viterra's crushing businesses could face regulatory scrutiny in Canada and Argentina.

Bunge last year was the largest corn and soybean exporter from Brazil, the world's top source of the staple crops for making animal feed and biofuels, according to data from shipping agent Cargonave. Viterra was the third-largest corn exporter and No. 7 soybean shipper.

Combined, the companies accounted for about 23.7% of Brazil corn exports in 2022 and 20.9% of Brazil soybean exports, Cargonave data showed.

In the United States, Viterra's business of buying and selling grain expanded via its purchase of Gavilon last year. The merger would enhance Bunge's grain exporting and oilseed processing businesses in the world's No. 2 corn and soy exporter, where it has a smaller presence than ADM and Cargill....

....MUCH MORE

We have so many posts on both Viterra and Bunge (along with Grain Corp+AWB, Gavilon and the rest of gang) that it is easier to simply link to search blog' results.

This one has always amused me. From 2017 referring back:

Early in the current decade we were pitching the idea that George Soros should use his position in Gavilon to acquire Bunge:

August 12, 2011
At What Price Does George Soros Find Bunge Attractive? (BG)

No, that's not a reference to the Brazilian girlfriend who's suing him for $50 mil., it's a ref. to Mr. Soros' love affair with all things ag.

We'll have more next week. BG at $61.11, down 24 cents....

 Gavilon was purchased by Viterra in 2022.

Penne for your pasta? Glencore Xstrata to sell off US third largest pasta company (GLEN.L)

That's taking the vertical integration thing a bit too far. The next step would have been for Canada's largest grain trader, Viterra, to own the supermarkets the pasta was sold in.
From Grainews:

Cereal maker Post to buy Viterra's U.S. pasta firm

Glencore to get US$370M cash for Dakota Growers

The maker of Shreddies, Honeycomb and Alpha-Bits cereals is set to take a major U.S. pasta processing plant off Viterra's hands.

Regina-based Viterra's owner, Swiss commodity giant Glencore Xstrata, announced Monday it will sell Dakota Growers Pasta Co. to Post Holdings for $370 million cash (all figures US$). The deal is expected to close in January 2014.

For Glencore, the deal marks another sell-off of assets from Canada's biggest grain handler, outside of its Canadian and Australian commodity grain handling business.
Viterra assets that have either been sold or committed for sale since its takeover by Glencore last year include its Canadian and Australian crop input retail businesses, Canadian and U.S. oat milling operations and Australian malting business among others....MORE

HT and headline: CityAM

Merger Action Down Under? Another Major Grain Handler in Play

Following up on yesterday's "Grain Handler Viterra gets Takeover bid from Glencore, report says (VT.tsx; GLEN.L)" and last week's "Glencore, Bunge Eye Sale of Soros-backed Gavilon" we have another potential target, this time antipodean.
From the Wall Street Journal's Deal Journal Australia blog:

GrainCorp Next in Grain Consolidation Wave?

Possible industry consolidation encouraged Australia’s largest grain handler GrainCorp to jump 8.6% to A$8.80 a share in early trade Monday after Canadian agribusiness Viterra disclosed Friday it has received “expressions of interest” from unidentified third parties....MORE

From The West Australian:

GrainCorp jumps on takeover speculation

...Although GrainCorp chief executive Alison Watkins has dismissed suggestions her company was vulnerable to a takeover, RBS Morgans analyst Belinda Moore said the grain handler was likely to attract the attention of global players given it was the last "significant" grain company capable of being taken over in Australia.

In terms of size, GrainCorp is on par with that of WA's CBH Group, however CBH is essentially shielded from takeover thanks to its co-operative structure.

Based on a takeover multiple of 10 times enterprise value/earnings - applied to previous transactions involving similar agribusinesses in the US - Ms Moore said GrainCorp could attract up to $16.56 a share, valuing the company at $3.28 billion.

The latest manoeuvrings come 18 months after GrainCorp sought to merge with listed rival AWB in a bid to bolster its defence against the arrival of foreign players in a deregulation market in Australia. GrainCorp lost out to a $1.2 billion cash bid for AWB from Canada's Agrium.

Any foreign takeover of Viterra would require approval from the Canadian government, which quashed BHP Billiton's bid for PotashCorp last year.

"Glencore bemoans lack of ag price volatility" (GLEN.L)

From Agrimoney:

GlencoreXstrata bemoaned a downturn in volatility in ag markets, and opportunities to profit from spreads, as the commodities giant unveiled a return to the red in its agricultural division.

The coal-to-biofuels group cautioned of a "generally subdued environment" in agricultural commodities which had left its farm division with a "slow start" to the year.

The unit reported a $20m operating loss in the first six months of the year, compared with a $103m profit a year before, despite a 70% jump to $16.1bn in revenues, thanks to the acquisition of grain handler Viterra.

The weakness reflected "a lack of old crop carry charges and price volatility" which left GlencoreXstrata's ag traders with "limited arbitrage opportunities".

Operating profits from the division's core crop marketing operations tumbled 87% to $15m during the half, despite an 82% jump to $14.6bn in revenues.

'Grain results were disappointing'

Activities in grains suffered particularly, thanks in part to the "significant" drop in last year's harvest in South Australia, Viterra's Australian stomping ground, cutting volumes for trading....MORE

Glencore, Bunge Eye Sale of Soros-backed Gavilon

From Reuters:

Global trading companies including Swiss Glencore (GLEN.L) and U.S.-based Bunge (BG.N) have expressed interest in the possible sale of U.S. energy and grains trader Gavilon Group, according to a source familiar with the matter.

Gavilon, owned by hedge fund manager Dwight Anderson and investors such as billionaire George Soros, began exploring fund-raising options in January, offering the chance to buy into a leading fertilizer distribution system, a network of grain storage bins and oil storage facilities in Oklahoma.

Bids are due soon for the potential sale, which could be worth up to $5 billion, the source said. Canadian grain handling firm Viterra (VT.TO), which has expanded significantly with acquisitions in recent years, could also be interested, according to the source.

Bloomberg previously reported the news and said that other potential bidders include Wilmar International (WLIL.SI), which does not have a significant footprint in the United States, and Japanese trader Mitsui & Co (8031.T).

Bloomberg said the company has also discussed a possible initial public offering with its bankers, it said.
Private equity funds have been excluded from the bidding, while leading traders like Cargill Inc CARG.UL and Archer Daniels Midland (ADM.N) have been discouraged from bidding due to potential antitrust risks, according to the Bloomberg report.

Gavilon has hired Morgan Stanley to advise on the process.

Bunge declined to comment. Glencore and Viterra could not be immediately reached for comment....MORE

"Ukrainian Grain Exported Through Tax-Avoiding ‘Shell Firms,’ Robbing Country of Wartime Revenue"

From the Organized Crime and Corruption Reporting Project, July 5:

Reporters looked into who imported millions of euros of Ukrainian “black grain” into the European Union. They found liquidated companies, proxies — and multinational agribusiness giants.

• Ukraine is investigating hundreds of firms, many created since Russia’s full-scale invasion scrambled the grain market, for allegedly failing to properly document their trading in Ukrainian grain or to pay taxes on it.
• Some of the EU companies that imported this grain from Ukraine raise serious questions themselves.
• Several had been ordered shut down by Hungarian authorities but continued trading. Some of the men listed as their owners and directors were patients in psychiatric hospitals; one is an aspiring TikTok influencer.
• The Romanian subsidiaries of major international agribusiness traders — COFCO International, Bunge, Viterra, and Ameropa Holding — also imported grain through Ukrainian companies under investigation.

This April, hundreds of Romanian farmers used tractors to block the Halmeu border crossing with Ukraine, protesting a flood of cheap grain from their war-torn neighbor. “We want to help, but not at any price!” they chanted.

“The imports from Ukraine are a big loss for us,” said David Gheorghe, a farmer who is also the mayor of the nearby town of Moftin. “They’ve filled the country with Ukrainian grain, and for us this is unfair competition.”

With Ukraine’s seaports blocked since Russia’s full-scale invasion last year, the number of grain trucks crossing Halmeu has skyrocketed: From just 10 per month in the early days of the war to 1,600 per month last fall.

In response to the farmers’ protests, Romania and other countries temporarily banned Ukrainian grain imports.

Ukraine’s President Volodymyr Zelensky has criticized the European restrictions as a threat to his country’s economy.

But Ukraine’s agricultural sector has also been damaged by the country’s own corruption, a new investigation by OCCRP and RISE Project, OCCRP’s Romanian member center, has found. Trade data obtained by reporters shows that, in the first seven months of Russia’s full-scale invasion, much of the grain passing through Halmeu and other border crossings was exported by dubious Ukrainian companies that are accused of tax evasion and other crimes.

These companies are among more than 300 under investigation by the Ukrainian authorities since last September. Prosecutors say they defrauded the state of at least $140 million last year alone.

As part of the investigation, authorities have seized tens of thousands of tons of grain from some of the companies, according to court records seen by reporters. Some have challenged these seizures, and the court cases are ongoing.

Multiple high-ranking officials are accused of abusing their positions to help set up the tax evasion mechanism, including senior customs officers working at ports in the Odesa region....

....MUCH MORE

Holy Crap: Russia pulls out of cartel, potash prices expected to plunge (AGU; POT; MOS; GLEN)

In late pre-market trade Agrium is down 8.67% at $83.50, Mosaic is Down 24.07% at $40.36 while Potash corp is down 23.01% at $29.18. A year ago Glencore was able to overpay for potash producer Viterra.

We haven't talked about any of the fert companies since the grains started weakening a year ago, nor any other inputs (Monsanto, Syngenta, DuPont etc.).
This move might be offering a generational opportunity, more to come.

First up, Canada's Globe and Mail:

The landscape of the world’s fertilizer industry is about to change as Russia’s Uralkali is dismantling one of the world’s largest potash partnerships by leaving a venture with a partner in Belarus.

Shares in North American producers of potash plunged in premarket trading on news of an anticipated steep fall in global prices of the fertilizer ingredient.

Potash Corp. of Saskatchewan Inc. stock in U.S. trading was down almost 24 per cent, while shares in Mosaic Co. and Agrium Inc. were off more than 23 per cent and 14 per cent, respectively.

Investors are reacting to the decision by Russia’s Uralkali to pull out of one the world’s major potash cartels, the Belarus Potash Company (BPC).

Uralkali said it expects the move will result in the fall of global prices by 25 per cent.
BPC – a partnership between Uralkali and Belaruskali – will be broken up, leaving North America’s Canpotex as the dominant global potash export partnership; Canpotex includes Potash Corp., Agrium and Mosaic....MORE

And from Reuters:
Russia's Uralkali quits top potash cartel, sees global price fall

* Uralkali pulls out of Belarus venture after "deadlock"
* Leaves Canpotex as world's top potash exporter
* Expects prices to fall to $300 a tonne from $400 a tonne
* Uralkali's shares plunge 15 pct

By Polina Devitt and Natalia Shurmina

MOSCOW, July 30 (Reuters) - Russia's Uralkali has dismantled one of the world's largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will cause global prices to plunge by 25 percent.

The break-up of the Belarus Potash Company (BPC) leaves North America's Canpotex as the ruling potash export venture. BPC and Canpotex had accounted for 70 percent of global trade in potash, an important ingredient for fertilizer, and the duopoly had set identical prices in key markets such as China and India.
Uralkali said it was pulling out after reaching "deadlock" over sales and would export all potash via its Swiss-based Uralkali Trading.

The decision may lead to a fall in the global potash price to below $300 per tonne in the second half of 2013, from the current $400 per tonne, it said. Lower fertilizer prices could result in rising demand from price-sensitive farmers in Asia....MORE

Wheat Wars: "Agrium Unveils Offer for Australian Wheat Exporter AWB" (AGU; AWB.asx)

Wheat is headed south again, down 8.25 cents at $7.26 in Chicago.
From the Wall Street Journal:

In an unexpected move, Canada's Agrium Inc. on Monday unveiled what could be a compelling offer for Australian wheat exporter AWB Ltd., which is working through a merger proposal with rival GrainCorp Ltd.

 

 

According to the conditional all-cash offer that values AWB at 1.24 billion Australian dollars (US$1.1 billion), Agrium proposes to pay A$1.50 for each AWB share, 24% more than the value Monday of the share-based merger with GrainCorp.

Agrium said its proposal represents a 57% premium to AWB's closing price of A$0.955 on July 29, just before the merger plan with Graincorp was announced. Under that plan, AWB shareholders were to get one GrainCorp share for every 5.75 shares held. At Monday's GrainCorp closing price of A$6.53 per share, that works out to around A$1.14 for every AWB share.

AWB shares surged 30%, or 32.5 cents, following the Agrium bid to A$1.42, the former wheat export monopoly's highest close since February 2009.

If successful, this could be the second case of a major Australian agricultural concern being taken over by a Canadian company in less than a year. Late last year, South Australia-based ABB Grain Ltd. was taken over by Canada's Viterra Inc. for about A$1.65 billion.

Calgary-based fertilizer company Agrium said it sees significant potential to enhance its product and service offerings to Australian and New Zealand growers. Through the 400 outlets in AWB's Landmark national rural merchandise and service network, Agrium is hoping to market its international fertilizer and crop protection capabilities, President and Chief Executive Mike Wilson said....MORE

From Deal Journal:
(click to enlarge)

...Below is Dealogic’s profile of the deal.

China's Biggest State-owned Grain Trader Buying Grain Traders

From Merco Press:
China buys majority stake in Nidera as part of its investment in food assets

 China's State-owned Chinese food giant Cofco Corp. on Friday announced it was buying a 51% stake in closely held grains trader Nidera NV. By investing in Dutch Nidera, Cofco--China's largest stated-owned grain trader-- would have greater control over pricing as well as better access to major grain-growing regions, such as Latin America and Russia.

 China is already a huge importer of soybeans from Argentina and Brazil, and has been investing more in agriculture in Eastern Europe. Nidera trades agricultural commodities, including grains and soybeans.

China has spent billions of dollars in the past decade acquiring commodities assets in metals and energy, but it has stepped up investing in food assets overseas in recent years, buying farmland in Latin America.

Growing wealth in China is prompting increased demand for food resources. In 2011, China became a net importer of rice, and the gap between exports and imports has been widening in recent years. Chinese imports of soybeans overtook domestic production in 2004. The country also imported record volumes of corn in December, mostly from the U.S., with most of that going toward feed for animals.

Nidera chief executive officer Ton van der Laan said the company had been looking for a strong partner in China and the rest of Asia to help it expand....MORE

And from the South China Morning Post:

Grain trader Cofco in talks to buy agribusiness unit of Nobel

• 

State-backed Cofco, which last week agreed to buy a 51 per cent stake in Dutch grain trader Nidera, was conducting due diligence on the Noble unit.

China's biggest grains trader, Cofco, is in talks to buy Noble Group's agribusiness arm in a deal that would value the division at around US$1 billion, sources said.

Acquiring the Noble unit would help China develop a powerful agricultural trading house, something it lacks.

State-backed Cofco, which last week agreed to buy a 51 per cent stake in Dutch grain trader Nidera, was conducting due diligence on the Noble unit, the sources said.

The precise stage of the talks was not clear, they said, cautioning that a deal for the unit, which trades and processes grains, may not materialise.

Noble said it was engaged in discussions with a consortium over a potential joint venture around its agriculture business, but no binding arrangements had been entered into. It did not identify Cofco as part of the consortium.
A Cofco spokesman said he was not aware of talks with Noble.

An acquisition push by Cofco comes after a wave of consolidation in the global agribusiness sector - including deals by Japanese firms to snap up rivals - that largely passed China by.

The Nidera acquisition was Cofco's first major overseas purchase of a trading house and signals China's ambition to create a global trading company along the lines of Japan- ese, European and US trading giants.

Last year, Japanese trading house Marubeni agreed to pay US$5.6 billion for US grain merchant Gavilon while Anglo-Swiss Glencore bought Viterra, Canada's largest grain handler, for US$6 billion in 2012....MORE

"Glencore takeover of Bunge 'could be possible this year'"—Credit Suisse (GLEN; BG)

Early in the current decade we were pitching the idea that George Soros should use his position in Gavilon to acquire Bunge:

August 12, 2011
At What Price Does George Soros Find Bunge Attractive? (BG)

No, that's not a reference to the Brazilian girlfriend who's suing him for $50 mil., it's a ref. to Mr. Soros' love affair with all things ag.

We'll have more next week. BG at $61.11, down 24 cents. 

But then Mr. Soros and Ospraie Management ended up selling Gavilon to Marubeni for $3.6 billion and we got bored watching Bunge, the worst-managed of the ABCD grain traders, current price, almost six years to the day later: $77.56, which, as Warren Buffet might say:

“Now I’m known as a long-term investor and a patient guy, but that is not my idea of a big move.”*

Anyhoo, on to the headline story from Agrimoney:

A takeover by Glencore of US-based ag giant Bunge "could be possible this year", Credit Suisse said, cutting its scepticism on a deal after the commodities group unveiled some wriggle room in its financial guidance.

Credit Suisse analysts - who last month flagged a "diminished risk" of Glencore succeeding in the takeover, after using up financial firepower on the acquisition of a stake in Hunter Valley coal operations – said that a Bunge could in fact be possible "in the near term".

The analysis followed Glencore comments on Thursday, as the group unveiled a return to first-half profit, signalling some potential for raising its debt above its self-proclaimed ceiling of $16bn

Steven Kalmin, the Glencore finance director said that while $16bn was "a pretty robust cap that we've been looking to manage the business around, I'm not saying we're going to die in a ditch" if it is breached in the short term.

"It's not going to go to $27 billion or whatever," Mr Kalmin, but signalled that it might "temporarily" exceed the cap, depending on the asset acquired it taking out the debt.

Sugar division sale?
Credit Suisse said, following the comments, that "we therefore infer that a Bunge acquisition could be possible this year [and] that the company is keen on exploring ways to do it".

A deal could be facilitated by Glencore taking on "a bit more debt", although the bank added that "we would think management would not want to do this in a significant way, say out to $18bn and then soon back".

The acquisition of Bunge, which has a stockmarket value of some $11bn, could also be enabled by making the US group a smaller target, through the sale of some operations....MORE

*That was Warren commenting on the secular bear market that ended in August 1982:

December 31, 1964: DJIA 874.12
December 31, 1981: DJIA 875.00

Previously on It's a small world after all:
February 2012
WTF? "Bunge to Buy Climate Change Capital" (BG)

I'm still trying to figure out why the ICE didn't get sued for bailing out Al Gore, Goldman Sachs and President Obama's pal Richard Sandor by way of their $604 million purchase of Climate Exchange, PLC.....

...Last week, James Cameron, founder and vice chairman of CCC, told Reuters the company was being sold "at a low point" in its valuation....MORE

It sure as hell better be.
As a side note, we don't own any Bunge but think it would be a good fit with either Louis Dreyfus or Glencore. 

March 2012
Glencore, Bunge Eye Sale of Soros-backed Gavilon
March 2012
Grain Handler Viterra gets Takeover bid from Glencore, report says (VT.tsx; GLEN.L)
August 2014
Commodities: "More Bumper Crops, Fewer Bumps at Bunge" (BG)

Nothing since.

"Dreyfus to Tap Capital Markets"

I attempt to respect the FT's no cut and paste policy but when they have the scoopage it is unavoidable.
From the Financial Times:

Louis Dreyfus Commodities, one of the world’s biggest food trading houses, plans to tap the capital markets for the first time in its 160-year history, as it embarks on a $7bn spending programme that will include a string of acquisitions.

The move comes as dealmaking sweeps the fast-consolidating agribusiness industry, with Glencore buying Canadian food trader Viterra for C$6bn and Marubeni of Japan eyeing a $5bn deal to snap up US-based grain trader Gavilon.

In a rare interview, Serge Schoen, chief executive, told the Financial Times that privately held Louis Dreyfus planned a 40 per cent boost in investment over the next five years compared with the 2006-11 period....MUCH MORE

Previously:
The Who's Who and What's What at Louis-Dreyfus
Commodities: Will Glencore Buy Louis Dreyfus Before it Goes After Xstrata? (XTA.L)