Editors’ Picks: Viterra not seeking AWB, yet

Speculation in Australia’s business media that Canada’s largest grain company may make a play for the former Australian Wheat Board is so far just speculation, according to Viterra’s CEO.

AWB Ltd. agreed late last month to an A$855 million (C$799 million) all-stock takeover bid by its larger Australian rival, GrainCorp.

The companies’ wedding is seen as a way to fend off domination of Australia’s grain trade by multinationals such as Switzerland’s Glencore, U.S. firms Cargill and Bunge, and/or France’s Louis Dreyfus.

But market observers, citing rising international grain prices, see what the Herald Sun daily newspaper last week called an “increasing likelihood” that multinationals such as Glencore or Regina-based Viterra could step forward as suitors for AWB or even GrainCorp.

But Viterra, which entered the Australian grain business last year with a C$1.4 billion takeover of ABB Grain, remains an “interested observer” of the GrainCorp/AWB courtship, according to the Australian Financial Review.

The AFR last week quoted Viterra CEO Mayo Schmidt as saying his company’s focus has been “entirely” on integration with ABB.

“We keep an eye on the market. We are certainly watching with interest, but in terms of what happens in our competitive environment that we operate in,” the journal quoted Schmidt as saying.

But the AFR also said Schmidt wouldn’t rule out a counter-bid for Melbourne-based AWB.

The journal cited investment industry observers as saying AWB’s Landmark rural services business, which includes merchandise, fertilizers, farm services, wool, livestock, finance, insurance and real estate, would be a “natural fit” for Viterra to consider.

The Herald Sun quoted Schmidt as saying further consolidation, such as a GrainCorp/AWB marriage, would be good for the grain industry in that country.

“We think any consolidation in our sector in Australia or other markets brings more discipline and allows it to be more competitive and for companies like ours to reinvest in the industry,” Schmidt was quoted as saying.

Observers have noted AWB has struggled to hang onto market share in Australia’s grain handling sector since it lost its wheat export monopoly powers in 2008, following a scandal over kickback payments to secure sales to Iraq.

— The “Editors’ Picks” feature highlights eyebrow-raising and unusual-yet-true news from the world of farming, as gleaned from various sources by the editorial staff of the Farm Business Communications division.


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