Agrium, Richardson plot Viterra deal

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Two of the country's biggest agriculture companies are working with Switzerland's Glencore International PLC on a takeover bid for Viterra Inc. , a plan that would further build the businesses of Calgary's Agrium Inc. and Winnipeg's Richardson family.

The three companies are looking at a deal for Viterra, an agribusiness conglomerate that is the largest handler of grain in Canada and Australia, and could carve it up.

Richardson International Ltd. would like to add some of Viterra's Canadian grain assets, such as elevators and port facilities, to its existing business.

Agrium, meanwhile, is interested in Viterra's almost 260 farm supply stores dotted across Canada, said a source familiar with the situation. Agrium operates about 75 stores in Western Canada but it is keen to develop a larger network. Purchasing Viterra's assets would cement its leadership position.

Glencore, a global commodities giant with no real presence in Canada, would be able take on the balance of the Canadian assets and would get Viterra's business in Australia, where it has almost 80 per cent of the grain handling market.

Glencore isn't interested in the retail assets, according to two people briefed on the company's thinking about Viterra. All of the people spoke on condition of anonymity because the talks are private.

Talk of a takeover bid has lifted Viterra's share price more than 44 per cent since last Friday, when the Regina company revealed that it had received "expressions of interest" from buyers.

The stock shot up another 9.8 per cent yesterday after the company confirmed it had started an auction, closing at $16.09, for a market value of $6-billion.

Viterra handles about 45 per cent of all grain handling in Western Canada, shipping it west and east to ports where it is loaded on to ships for international buyers. Richardson International is a distant second in that business, with roughly 23 per cent, but buying some of Viterra's assets would vault it to a more equal position.

In addition to getting each company the assets they prize most, the split is also designed to appeal to governments on the prairies and in Ottawa that are concerned about the loss of a large Canadian company. While Viterra would disappear, Agrium and Richardson International would get stronger.

Bringing Richardson into the deal is seen as a particularly shrewd move to appease any nationalist concerns about a foreign takeover. The family-owned company is something of an icon on the prairies and it dates back more than 150 years. The grain business is part of the James Richardson & Sons Ltd. conglomerate, which also includes interests in financial services, energy and food processing. It has been run by five generations of Richardsons.

The Richardson presence in Winnipeg is hard to miss. The family's name is on one of the city's tallest buildings in the heart of downtown as well as the recently opened airport.

But not everyone is thrilled with idea of Viterra being bought up by Glencore, Richardson and Agrium.

"I don't think we want to get into a situation where we only have one or two players," said Arlynn Kurtz, a Saskatchewan farmer who is also a Viterra shareholder and on the executive of the Agricultural Producers Association of Saskatchewan. He fears the merger will to more consolidation and fewer choices for farmers.

Mr. Kurtz said he was not surprised that Viterra is up for sale or that Richardson would be part of a bid. However, he said he is worried about any concentration in ownership that hurts farmers and he expects the association to urge the Competition Bureau to closely review the takeover.

Agrium's acquisition of Viterra's retail outlets is particularly concerning because it could give that company a near-monopoly position, added Garth Burns, who also farms in Saskatchewan.

"As soon as you start eliminating players in the game, you lose your bargaining power," he said. "Having all those players around keeps everybody in check."

Viterra has been in play since publicly acknowledging a week ago that potential buyers had approached the company about a takeover. Others expected to bid include U.S. agribusiness behemoths Archer-Daniels-Midland Co. and Bunge Ltd.