March 20, 2012 / 7:43 PM / 6 years ago

Richardson bulking up, not selling out

WINNIPEG, Manitoba (Reuters) - Fresh off executing the biggest acquisition in its 155-year history, Canadian grain handler Richardson International Limited is eager for more growth and turning a deaf ear to suitors for the family company, president Curt Vossen said in an interview with Reuters.

Swiss-based Glencore’s friendly takeover of Canada’s leading grain handler Viterra VT.TO spins off to privately held Richardson a beefed up role in handling, processing and marketing Canadian crops.

Suitors have already come calling on Richardson, Vossen said.

“Sure we’ve been a player in that regard. Do we have any intention of responding to those (inquiries)? No, our shareholders have indicated a strong desire to make this a seven-, eight-, nine-generation play, and they’ve got a few more to go.”

Glencore will take the bulk of Viterra’s grain-handling assets in Western Canada and Australia. Richardson scooped up 19 Canadian grain elevators, 13 attached farm retail outlets, a grain port terminal in Thunder Bay, Ontario and a one-quarter interest in a port terminal at Vancouver, in a C$900 million purchase.

Richardson also picks up some food processing plants in Canada and the United States.

Most of Viterra’s farm retail outlets, which sell seed, chemical and fertilizer to farmers, will go to Calgary, Alberta-based Agrium AGU.TO.

The global agricultural industry should expand as the growing world population boosts demand for food, whipping up interest in some existing players.

The deal marks the second time in five years that Winnipeg’s Richardson family has played a secondary, but likely highly profitable role in Canada’s biggest farm M&A deals.

In 2007, Richardson gave up its bid for leading Canadian farm player Agricore United in exchange for a collection of Prairie grain elevators and farm retail outlets.

Richardson’s move allowed Saskatchewan Wheat Pool to swallow Agricore and become Viterra.

“We’re mindful of our size and we don’t want our reach to exceed our grasp,” Vossen said. “We’re not the biggest organization in the sandbox.”

With that in mind, Richardson is not acquiring any of Viterra’s Australian assets, but will pick up U.S. assets for the first time - a wheat mill in Texas and an oat plant in Nebraska.

They may not be Richardson’s last U.S. acquisitions.

“We’re getting to a pretty good size in Canada,” Vossen said. “I think it behooves us to look at other opportunities. They may be in the United States and they may be elsewhere.”

That said, Richardson is not looking at buying all or part of U.S. grain and energy trader Gavilon Group, which is up for bids.

“I’m still digesting.”

Prior to agreeing to buy some Viterra assets, Richardson has also been aggressive in growing organically in recent years, building a new crushing plant and adding storage capacity. It plans to maintain that approach with its new assets, Vossen said.

Before the deal is approved, Glencore’s acquisition of Viterra, as well as its spinoffs to Richardson and Agrium, will face a review by Canada’s Competition Bureau.

There should be little concern arising from Richardson’s moves, he said.

“On the grain side, you had one dominant party with 45 percent market share, that being Viterra. This (deal) grows us so we can be similarly sized” with Glencore, Vossen said.

Both Richardson and Glencore look to have a little more than one-third of Western Canada’s grain-handling capacity after the deal. Currently, Richardson has about one-quarter and No. 3 Cargill CARG.UL has an estimated 15 percent.

The 19 elevators Richardson is acquiring fill gaps in the company’s collection system - such as in west-central Saskatchewan - which should add to farmers’ choices in pockets of the Prairies, Vossen said.

Reporting by Rod Nickel in Winnipeg; Editing by David Gregorio

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