Viterra Sale May Raise Competition Concerns, Premier Wall Says

Saskatchewan Premier Brad Wall said Glencore International Plc’s proposed acquisition of Viterra Inc. (VT) raises concerns about reduced competition in the market for crop inputs such as fertilizer.

While the transaction addresses competition issues in grain sales and handling, the province needs to study whether there will be less competition for inputs, Wall said yesterday. He has set up a working committee to study the deal and make recommendations to the federal government.

“There are real questions that we need to find out about the inputs in the fertilizer side because I think there’s concentration issues there possibly,” Wall said in a telephone interview from Regina, the provincial capital. “We’ll do our homework though and come to a decision and make a recommendation.”

Glencore, the largest publicly traded commodity supplier, offered C$6.1 billion ($6.1 billion) to buy Viterra, Canada’s biggest grain handler. As part of the transaction, Calgary-based Agrium Inc. (AGU) will acquire about 90 percent of Viterra’s Canadian retail facilities.

Agrium’s “retail presence” in Western Canada may increase by 3 to 4 percentage points after the Viterra deal, Richard Downey, an Agrium spokesman, said yesterday in a telephone interview.

Under the Investment Canada Act, the federal government reviews foreign acquisitions of companies with assets valued at more than C$330 million. The C$16.25-a-share offer announced by Baar, Switzerland-based Glencore will also require approval from Canada’s competition bureau, which said it would be reviewing the proposed transaction.

‘Platform’ for Expansion

In its March 20 announcement, Glencore said the company will use Viterra’s head office in Regina as a “platform” for its North American agricultural operations and a potential expansion into the U.S. Glencore also pledged to make additional investments in Canada and continue with Viterra’s charitable commitments and funding for local institutions.

“There are other things that we noted in the press release earlier this week that I would say are interesting to us,” Wall said.

The federal government rejected a $40 billion hostile bid by Melbourne-based BHP Billiton Ltd. (BHP) for Potash Corp. of Saskatchewan Inc. in 2010, saying the proposal for the world’s largest potash miner didn’t provide a “net benefit” for Canada.

Wall, who led opposition to the Potash bid, said the Viterra sale is “a lot different” in terms of both scope and assets involved.

Simon Buerk, a Swiss-based Glencore spokesman, didn’t immediately respond to a voicemail or e-mail seeking comment after normal business hours yesterday.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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