Glencore’s deal for Canada grain giant

Glencore, which is also in the throes of a $36bn takeover of miner Xstrata, already markets and produces crops as well as metals, minerals and oil, but has earmarked agricultural commodities as an area for growth.

It said the deal offers C$16.25 per Viterra share and has been unanimously approved by Viterra’s board.

The price, broadly in line with market expectations after days of speculation, is a 48 per cent premium over Viterra’s closing price on March 8, the day before it announced it had received expressions of interest.

Glencore said it would pay for the deal using existing cash resources and credit facilities, but will also lighten the burden by selling the majority of Viterra’s Canadian assets and some others to agri-business firms Richardson International and Agrium for roughly C$2.6bn in cash.

Shareholders accounting for 16.5 per cent of Viterra’s stock, including the company’s largest investor, Alberta Investment Management, have already pledged their support for the deal.

The rest of Viterra’s investors will vote on the deal at a special meeting expected in May.

Viterra will pay Glencore a C$185m break fee if it accepts a better offer from another party, or if its board withdraws or modifies its recommendation.

Glencore would have to pay Viterra a C$50m reverse break fee if the deal does not close for regulatory reasons.