Viterra rally dies amid takeover concern

by World Grain Staff
Share This:

CALGARY, ALBERTA, CANADA — A rally in Viterra Inc. bonds following Glencore International Plc’s proposal to take over Canada’s biggest grain handler has fizzled out as investors weigh regulatory hurdles and the effect of Europe’s debt crisis on the Swiss company, Bloomberg reported on June 19.

Yields on Viterra’s C$200 million ($196 million) of notes due in February 2021 rose to 5.22% on June 18 from 5.02% at the start of the month, according to data compiled by Bloomberg. Yields of similarly rated comparable bonds fell to 7.6% from 8.1% during the same period, Bank of America Merrill Lynch index data show.

The decline has erased gains registered since Glencore announced a takeover agreement of Viterra in March that promised higher credit ratings and the backing of a balance sheet fortified by a $10 billion initial public offering last year, Bloomberg said. Concern that Glencore’s earnings will suffer from a rout in commodities and a downturn in the global economy is overshadowing earlier investor optimism.

The Canadian government extended its review of Viterra’s acquisition by the commodity supplier by a month past the initial review period scheduled to end on June 18, Glencore said in a statement on June 15. Viterra agreed in March to sell itself to Baar, Switzerland-based Glencore for C$6.1 billion.

The acquisition includes side deals to sell about 90% of Viterra’s farm-retail outlets to Calgary based Agrium Inc. and various grain-handing assets to privately held Richardson International Ltd.

Partners