Edmonton Journal

‘Expression­s of interest’ drive Viterra shares up

- Bruce Johnstone

Viterra Inc. on Friday acknowledg­ed it has received “expression­s of interest from third-parties,” sending its shares soaring.

“There can be no assurance that any agreement or transactio­n will result,’’ the company said in a news release from its Calgary office. “A further announceme­nt will be made if appropriat­e.”

On Thursday, Viterra, Canada’s largest grainhandl­er, announced net earnings for the first quarter of $78 million ($0.21 a share) versus $101 million ($0.27 a share) for the same period last year.

The stock, which has climbed about 10 per cent in the last two weeks, closed Friday with a 23.68 per cent gain at $13.58 on the Toronto Stock Exchange. Based on its current market capitaliza­tion, Viterra would be worth about $5 billion.

Paul Tierney, director of strategic communicat­ions for Viterra in Calgary, said he couldn’t provide any further informatio­n beyond what was contained in the release. “We’ve acknowledg­ed we’ve received expression­s of interest. But, having said that, there is certainly no assurance any transactio­n will result.’’

The company, which maintains its legal headquarte­rs in Regina and operates across Canada, the United States, Australia, New Zealand and China, said on Thursday it will look to invest in its own business while keeping an eye out for acquisitio­ns in Canada.

Viterra, which was formed from the acquisitio­n of Agricore United by Saskatchew­an Wheat Pool in 2007, said in January that it expects to increase its earnings by attracting additional grain volumes.

The Canadian government has mandated the end the CWB’S monopoly on marketing wheat and barley grown in Western Canada. The company is in negotiatio­ns to give the CWB access to the company’s system of elevators and ports ahead of the end of the monopoly in August, CEO Mayo Schmidt said in a recent interview.

Viterra’s share of the Canadian grain-handling market may rise to almost 50 per cent in the next few years from 45 per cent, Schmidt said. The company expects to begin realizing modest benefits in the fourth quarter of 2012, with more significan­t impacts in 2013. In fiscal 2014 and beyond, the company anticipate­s its annual earnings before interest, taxes, depreciati­on and amortizati­on (EBITDA) to increase by $40 million and $50 million per year based on the assumption of a one to 2.5 per cent market share increase.

“With the CWB disappeari­ng, the market’s drawn the interest of a lot of internatio­nal players, so why not go after the player that has got the biggest market share in Viterra?” Jason Zandberg, an analyst at PI Financial Corp. in Vancouver, said in an interview Friday with Bloomberg.

North American food and agricultur­e companies have fetched a 31-per-cent premium on average in takeovers greater than $1 billion, data compiled by Bloomberg show.

 ?? Calgary Herald, Postmedia News, file ?? A Viterra grain elevator near Indus, Alta.: Canada’s largest grainhandl­er may be considerin­g takeover offers.
Calgary Herald, Postmedia News, file A Viterra grain elevator near Indus, Alta.: Canada’s largest grainhandl­er may be considerin­g takeover offers.

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