Premier responds to possible Viterra takeover bids

March 12, 2012 - 6:53am Updated: March 12, 2012 - 2:25pm
Regina Viterra Building. Karen Brownlee/News Talk Radio
Regina Viterra Building. Karen Brownlee/News Talk Radio

Regina-based grain company Viterra is in high demand with two major players  reported to be making offers for a takeover.

Bloomberg is reporting Swiss commodities and mining giant Glencore PLC has made a $5.5 billion offer for Canada's biggest grain handler. The Wall Street Journal is reporting grain distributor Cargill is also interested.

Takeovers like this one hinge on approval from the federal government through Investment Canada - a process Saskatchewan became very familiar with last year.

Premier responds

The talk of a possible takeover for Viterra has not escaped the attention of the Saskatchewan government. Last year Premier Brad Wall stepped in to encourage the federal government to reject a bid for potash giant BHP Billiton to takeover Potash Corp on the grounds that the bid was not in the best interests of the province.

Now the premier has insisted the same question will apply to any bids for Viterra and the government will get involved.

"Saskatchewan would be engaged in the process again as we were in a deliberate way, and we would ask the question - is this a net benefit to Saskatchewan and Canad?" Wall said.

He stressed his personal 'free market' ideology is trumped by the net benefit requirement. He added the province will use the same three criteria which guided the government during the Potash Corp deal.

"Number one from a jobs perspective, number two from a fiscal perspective, and number three from a strategic interests perspective," Wall said.

Unlike potash, Wall noted grain is not considered a 'strategic resource' which would make blocking a possible takeover more difficult. He agrees agriculture is an important part of the provincial economy and he fully expects many companies to have a big presence here in the post-Wheat Board monopoly era.

Wall also said the willingness of any future owner for Viterra to increase head office presence in Saskatchewan would be part of the equation to block or support a takeover bid.

Economist perspective

There is no official confirmation on any of these offers, but director of equity trading at Scotia McLeod, Fred Ketchen can see why they would be interested.

"Glencore is a company that is like Cargill in the US and it has a business that is on the periphery of this kind of an industry and I think they just want to perhaps increase their representation in a business that obviously is in a growing mode," Ketchen said.

After Viterra's announcement Friday, shares in the company spiked by 24 per cent. This is also not surprising according to Ketchen, who said possible takeovers excite markets because they have the potential to make money for shareholders.

The interest is sparked by the end of the Canadian Wheat Board's monopoly in August which will eventually mean big money for Viterra with $40 to $50 million more in annual earnings.

Edited by News Talk Radio’s Adriana Christianson