Glencore eyes £3.5bn grain giant buyout

COMMODITIES giant Glencore has emerged as the mystery bidder for Canadian grain giant Viterra.

The Swiss trading firm, currently putting the final touches to a $90bn (£57bn) merger with mining group Xstrata, has made an approach for Viterra, which on Friday told the market it had been subject to expressions of interest.

Glencore is already one of the world’s top producers and marketers of commodities including crops, metals, minerals and energy but lost money on agricultural commodities in 2011. It wants to build a major agricultural business in North America and is also set to compete with Bunge over the possible sale of US energy and grains trader Gavilon.

Viterra could cost around £3.5bn, however, because an imminent shake-up of the Canadian grain industry will boost its attractiveness and increase its earnings by C$40m (£25.78m) to C$50m a year.

The Canadian government is set to break up the Canadian Wheat Board’s wheat and barley marketing monopoly in Western Canada in August, meaning Viterra can buy grains directly from farmers for the first time.

Shares in Viterra soared 24 per cent in Toronto on Friday, giving the company a market value of more than C$5bn, after a brief trading halt, during which the company said it had received expressions of interest.

Yesterday Viterra and Glencore declined to comment on any deal.

Last month Glencore and Xstrata agreed an all-share merger in the mining industry’s largest ever deal, creating a commodities powerhouse spanning mining, agriculture and trading.