Prime Minister Stephen Harper said on Sunday that the structure of Glencore International PLC’s $6.1-billion deal to buy Viterra Inc. , Canada’s largest grain handler, means it should not necessarily be seen as a full foreign takeover.
Mr. Harper’s comments come as the Canadian government and regulators begin reviewing the offer by Swiss-based Glencore, the world’s biggest commodities trader. Glencore plans to acquire Viterra, then sell off some parts to Winnipeg-based Richardson International and Calgary’s Agrium Inc.
“My understanding of the deal is that many of the assets will actually remain in Canadian hands, so I’m not sure it really would be categorized at this point as primarily a foreign investment,” the Prime Minister told reporters during his official visit to Japan.
“I think the most important thing is that it does show with the reforms we’re making to the grain sector how much interest there is now in the expansion of the grain sector and the agricultural sector in Canada, and I think that’s a tremendously good thing.”
In 2010, Ottawa blocked a hostile bid by BHP Billiton Ltd. for Potash Corp. of Saskatchewan Inc. , the world’s largest fertilizer maker, stirring concern about whether the government will allow Viterra to fall under foreign control.
But analysts have said structuring the deal to sell the majority of Viterra’s Canadian assets and some others to closely held Richardson and Agrium for roughly $2.6-billion in cash should allay concerns that Ottawa could block it on national sovereignty or competition grounds.
The Glencore-Viterra deal comes after Mr. Harper’s Conservative government ended a long-running monopoly by the Canadian Wheat Board on marketing Western Canadian wheat and barley.
Separately, Mr. Harper and Japanese Prime Minister Yoshihiko Noda announced the beginning of negotiations toward a free trade agreement between the two countries. The Canadian government said in statement that a deal could mean gains of up to $3.8-billion a year in gross domestic product.
The negotiations will likely be fiercely opposed by the Canadian Auto Workers’ union, which represents workers at the Canadian units of General Motors Co., Ford Motor Co. and Chrysler Group LLC .