Glencore to buy Viterra for £3.9bn

Glencore, the world's largest commodities trader, is buying Canada's leading grain handler, Viterra, in a cash deal valuing it at C$6.1bn (£3.9bn).

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 8 March, 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.

Agrium will acquire the majority of Viterra's retail agri-products business, including its 34 percent stake in Canadian Fertilizer, for which it will pay C$1.8bn .

Richardson will acquire 23 per cent of Viterra's grain-handling assets as well as certain processing assets in North America for C$800m.

"The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets," Chris Mahoney, Glencore's head of Agricultural Products, said in a statement.