The move on Canadian grain group Viterra sent shares in Graincorp, our last independent grain group, up sharply yesterday.
Viterra also has operations in Australia, having bought control of ABB Grain in 2009 for $1.4 billion.
Graincorp shares jumped by nearly 9% yesterday to a day’s high of $8.80 before easing to $8.44, a gain of 34c or 4.2% on the day.
Weekend news reports said that Viterra had been approached by a ‘third party’ which was then claimed to be the aggressive commodity trader Glencore which is trying to merge with its 34% owned associate, Xstrata.
London reports named Glencore as the mystery third party referred to by Viterra in a statement on Friday night, our time, in Canada.
Viterra’s Australian-listed shares shot up $3.39, or 33% yesterday, to $13.75.
Viterra’s Canadian-listed shares rose 24% on Friday to close at $C13.58, giving the company a market cap of $C5.05 billion (around $A5 billion).
They rose a further 2.7% in Canada overnight Monday as analysts pointed out there could be problems with Canadian government approval if a foreign company, such as Glencore, made a bid.
They pointed to the Government opposition to the BHP Billiton bid for Potash Corporation which stymied the deal.
The Wall Street Journal reported that US group Cargill may also make a tilt at Viterra. It would have to get Canadian Government approval as well.
The move on Viterra comes as Canada prepares to deregulate grain marketing in August, with the Canadian Wheat Board set to lose its monopoly.
Viterra said in a statement on Friday that it had received expressions of interest only hours after Mayo Schmidt, chief executive, told Canadian television the company was not a takeover target.
Besides Glencore and Cargill, the usual suspects include big traders such as Dreyfus, Bunge and Noble Group and Wilmar from Singapore.
Bloomberg reported that Viterra is likely to run an auction process leading to a sale.
Viterra is offside with its biggest shareholder, The Alberta Investment Management Corporation, which owns 16%.
Last November it attacked Viterra for failing to improve shareholder value.
Bloomberg said the pension fund said on Friday it stood by its earlier comments, which would indicate it is in the mood to possibly support a third party bid or auction process..
The private group, Richardson International, is one of Viterra’s main competitors but hasn’t been mentioned as a possible bidder.
Viterra’s potential sale isn’t the only bit of action for the North American grains group.
US grain trader, Gavilon, has put itself on the market with a tag suggested at around $US5 billion.
It could attract one or two of the major players away from Viterra.
Viterra’s first-quarter net profit fell 23% to $C77.7 million, down from the $C101 million earned in the previous corresponding period.
That 22% fall is hardly the best advertisement for a sale.
