Viterra another example of Canadian short-sightedness – by Eric Reguly (Globe and Mail – March 24, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

ROME— Canada’s Viterra Inc. (VT-T15.91—-%) attracted lavish takeover attention, to no one’s surprise. The company is one of North America’s premier grain handlers and marketers. It is a huge supplier of fertilizer, seed and other agri-products to Canadian farmers. It owns great chunks of the South Australian grain-handling network. Between Canada and Australia, Viterra is a key player in two of the world’s most important bread baskets.

In short, it was a global champion in the making. Not any more. Early this week, Viterra was blown away like a tumbleweed by Glencore International of Switzerland, the world’s biggest and most aggressive commodities trader. Glencore, which is paying $6.1-billion for its prize, is keeping most of Viterra’s grain elevators, ports and other bits of infrastructure, plus virtually all of the Australian goodies. The rest of the company, such as the fertilizer business, is to be divvied up between Agrium and Richardson International.
What a shame. Canada needs global corporate champions. It has, perhaps, three: Bombardier, the world’s third-largest aerospace company, Barrick, the top gold player, and Potash Corp. of Saskatchewan. Potash Corp., the global fertilizer leader, would have disappeared too had the federal government not blocked its sale to Australian mining colossus BHP Billiton in 2010.
There is no sense that the feds will deprive Glencore of Viterra. Viterra does not have commanding control of a single, and globally essential, resource, as Potash Corp. does. Viterra’s sale has not triggered a political backlash, as Potash Corp.’s proposed flight did. The agreements with Agrium and Richardson go some way to “Canadianize” the bid, diluting the image of Viterra being served like dinner to a voracious foreign predator.
The deal will not be killed by Investment Canada, nor should it. Viterra is a willing seller, and that’s the problem. It and its investors are happy to sell too quickly in yet another case of greed-driven, short-term Canadian thinking.
To be sure, it seems that Glencore’s $16.25 a share bid, which values Viterra at about 10 times EBITDA (earnings before interest, taxes, depreciation and amortization) is not outrageously mean. But that’s not the point.

The point is that Viterra is irreplaceable, certainly within our lifetime. Glencore is nabbing 63 grain elevators and seven port terminals in Canada that could not magically be built overnight should another group of investors decide to clone Viterra.
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