Analysis: Canada may allow a foreign takeover of Viterra

Tue Mar 13, 2012 3:30pm EDT
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By Rod Nickel and Randall Palmer

WINNIPEG, Manitoba/OTTAWA (Reuters) - Canada would probably allow a foreign takeover bid for the nation's biggest grain handler, Viterra VT.TO, letting the Conservative government to win back some free-market credibility after it unexpectedly blocked a 2010 foreign deal for fertilizer giant Potash Corp.

Like any other sizeable foreign offer, a bid for Viterra would face an automatic review from federal industry minister Christian Paradis, as well as from anti-trust authorities.

But it would be a smaller bid than the $39 billion attempt to buy up Potash Corp and - importantly - the head of Viterra's home province of Saskatchewan has signaled a softer stance.

"(Saskatchewan Premier) Brad Wall has... already made a declaration that he doesn't see it, as Potash, as a strategic resource, so I think that sends a different signal compared to Potash," said a Conservative source.

"If it's not a vital resource, why not open it up, and I think that's the direction the government's going to go in."

There has been no formal offer yet for Viterra, which had its roots in a farmer-owned cooperative called the Saskatchewan Wheat Pool.

But Swiss-based Glencore (GLEN.L: Quote) is seen as a possible bidder in a $6-7 billion takeover that could give it the lion's share of supplies in Canada, the world's biggest exporter of spring wheat, canola, durum and oats.

Viterra became an attractive prize after Ottawa ended the Canadian Wheat Board's 69-year-old monopoly on wheat and barley for milling or export from Western Canada, giving other players' more incentive to enter the long-closed market.   Continued...