October 22, 2012 / 6:50 PM / in 5 years

Viterra shares hit 7-month low as Canada rejects takeovers

* Glencore takeover of Viterra awaits China approval

* Canada weighing Chinese bid for oil producer Nexen

* Canada rejected 2 takeover bids last week

By Rod Nickel

Oct 22 (Reuters) - Shares of grain handler Viterra Inc dropped to a seven-month low on Monday, caught in the downdraft of a selloff related to two rejected takeovers of Canadian companies, observers said.

The Toronto Stock Exchange’s S&P/TSX composite index dropped 0.5 percent in early afternoon trading Monday, as Canada’s rejection of a foreign bid for Progress Energy Resources Corp rippled through energy stocks and tempered gains in mining stocks.

Viterra shares dropped by as much as 2.2 percent.

That continued a steep two-day selloff that started Friday after Canada’s broadcast regulator vetoed a C$3-billion takeover by BCE Inc of Astral Media.

Viterra’s lowest-traded price of C$15.65 was the lowest since before Glencore International PLC bid C$6.1 billion ($6.2 billion) for Viterra in March.

The deal still needs approval by China’s Ministry of Commerce. Canada has already approved the deal in July.

“Viterra is down because of all the other deals that have blown up,” said a small shareholder in the company. “I think it’s people risk-reducing positions just because they have to. Viterra’s an easy target.”

Late on Friday, Canada blocked Malaysian state oil firm Petronas’ C$5.17 billion ($5.2 billion) bid for gas producer Progress Energy Resources in a surprise move that could signal problems for Chinese oil group CNOOC’s C$15.1 billion bid for oil producer Nexen.

“Many investors are concerned that if this (Nexen) deal is also turned down, that the Chinese decision on Viterra/Glencore will be put in jeopardy,” said analyst Steve Hansen of Raymond James, who follows Viterra.

Glencore’s pending takeover of Viterra, overwhelmingly approved in the spring by Viterra shareholders, would pay a cash price of C$16.25 per share.

The Glencore deal has cleared Canadian regulators. It was first expected to close in late July, but now may wait until as late as Nov. 15, according to Viterra.

Any delay of the Glencore-Viterra deal also affects side deals Glencore has in place to sell some Viterra’s assets to Agrium Inc , Richardson International Limited and CF Industries Holdings Inc..

Glencore has agreed to sell most of Viterra’s Canadian and Australian farm supply stores to Agrium for C$575 million, and some of Viterra’s country elevators, port storage space and processing plants to Richardson for C$900 million.

Glencore would sell Viterra’s minority stake in Canadian Fertilizers Ltd, an Alberta nitrogen plant, to the site’s majority owner, CF Industries, for C$915 million.

$1=$0.99 Canadian Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Theodore d'Afflisio

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