BUSINESS

Grain-handling giant Viterra acknowledges 'expressions of interest' in company

03/09/2012 01:49 EST | Updated 05/09/2012 05:12 EDT
CALGARY - Viterra Inc. acknowledged Friday that it has received "expressions of interest" from unnamed third parties concerning a possible takeover, a deal that could be worth more than $5 billion based on the company's stock price.

No other details were released by Canada's largest publicly traded grain handler, which said it was making the announcement "in view of market activity in Viterra's shares."

"A further announcement will be made if appropriate," the company said.

Trading in Viterra's stock was halted on the Toronto Stock Exchange ahead of the announcement, but once trading resumed, it shot up nearly 24 per cent to close at $13.58. It was the second-most active issue on the TSX, with 15.5 million shares trading hands.

The potential bid comes as Calgary and Regina-based Viterra (TSX:VT) is poised to benefit from the end of the Canadian Wheat Board's long-running monopoly on the marketing of wheat and barley.

In the financial year that begins Nov. 1, 2013, and beyond, Viterra has said it anticipates a $40-million to $50-million boost to annual profits before interest, taxes and other items.

Soon after the bill was passed, Viterra began taking bids from farmers to sell their grain starting in August, and in an interview Thursday CEO Mayo Schmidt said interest has been strong so far.

Viterra was formed by the merger of the Saskatchewan Wheat Pool and Agricore United. Its acquisition of ABB Grain provided it with a foothold in Australia and the Asia-Pacific region.

Alberta Investment Management Corp. is the largest shareholder in Viterra with a roughly 16 per cent stake or about 60 million shares.

The company has operations across Canada, the United States, Australia, New Zealand and China, as well as a growing international presence elsewhere with its grain handling and marketing, agri-products and processing businesses.

The news comes a day after the company released its results for its most recent quarter, in which it posted a 23 per cent drop in net earnings to $77.7 million.

On a per-share basis, profits were 21 cents per share, versus $100.7 million, or 27 cents per share, during the same period a year earlier.

The earnings came in roughly in line with the 20 cents per share analysts polled by Thomson Reuters had been expecting.

Consolidated revenue was $3.56 billion, up from $2.33 billion in the same prior-year period, a 53 per cent increase due mainly to its grain handling and marketing segment.

The prospect of a potential takeover did not come up during Viterra's conference call with analysts Thursday. If anything, the market was curious whether Viterra would make any acquisitions of its own. It offered no comment on whether it would make a play for Gavilon Group, a U.S. energy, grain and fertilizer trader that has put itself on the block.

In the Thursday interview, Schmidt said the company's focus is on growing organically and improving its existing system.

"At least for now, unless something special were to change, that would be our focus — continued new improvements of the efficiencies of the system that we have today."