G3 to create coast-to-coast Canadian grain network

by World Grain Staff
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Map of G3 businesses in Canada

WINNIPEG, MANITOBA, CANADA — The newly established G3 Global Grain Group, which announced April 15 that it will purchase controlling interest of CWB, said it wants to establish an efficient coast-to-coast Canadian grain enterprise that provides stronger market access for growers.

G3 is a joint venture between Bunge and state-owned Saudi Agricultural and Livestock Investment Company (SALIC) that was established to purchase a controlling interest in CWB, formerly the Canadian Wheat Board.

The C$250 million ($203 million) investment — subject to certain closing conditions and adjustments — will result in G3 acquiring a majority ownership interest of 50.1% in CWB, with the minority ownership interest to be held in trust for the benefit of farmers. That trust will be administered through the Farmer Equity Plan announced by CWB in 2013. G3, which will be headquartered in Winnipeg, Manitoba, Canada, is a joint venture between Bunge Canada, a subsidiary of Bunge Limited and SALIC Canada Limited, a wholly owned subsidiary of SALIC.

CWB has been preparing for commercialization since the government ended its monopoly in 2012. The Marketing Freedom for Grain Farmers Act gave CWB a deadline of August 2016 to submit an application for continuance.

CWB and its corporate advisors established a strategy and timeline for commercialization that aimed to beat that deadline. CWB conducted an extensive worldwide search, engaging accounting and legal expertise to consider over 50 potential strategic investors.

“It is a dynamic time for Canadian agriculture. As global demand for agri-products grows, consumers continue to demand the high quality grain produced by our Canadian farmers,” said Karl Gerrand, chief executive officer (CEO), G3. “Our vision is to establish a highly efficient coast-to-coast Canadian grain enterprise that provides stronger market access solutions for growers and delivers value to our stakeholders and the Canadian agriculture industry as a whole. We welcome the CWB team and farmer equity owners, and look forward to working together to build a new and dynamic company.”

Gerrand most recently was managing director for Bunge Canada, providing leadership for the company’s Canadian operations. Prior to that, he was chief operating officer, processing for Viterra from 2004 to 2013. From 2000 to 2004 he was president of Can-Oat Milling Inc.

Once fully realized, the government of Canada expects the deal to increase Canada’s grain export capacity and add hundreds of jobs and hundreds of millions of dollars of economic growth.

"Our commitment to marketing freedom and increasing marketing choice has always been about giving farmers the right to sell their own grain to a buyer of their choice. The removal of the CWB monopoly attracted numerous investors wanting to expand Canada’s grain capacity and supply chain,” said Canadian Agriculture Minister Gerry Ritz. “This investment deal offers Canadian farmers access to a new global player to compete for their grain and more delivery points for farmers to sell their grain. The result of these new investments and jobs will provide a huge economic benefit to the grain sector and Canada’s overall economy."

CWB operates a network of seven grain elevators in Western Canada and port terminals in Thunder Bay, Ontario and Trois Rivieres, Quebec, and it is building four additional state-of-the-art grain handling facilities in Bloom and St. Adolphe, Manitoba, and Colonsay and Pasqua, Saskatchewan, Canada. Bunge’s export terminal in Quebec City as well as four elevators in Quebec will be part of the transaction.

“Bunge’s relationship with Canadian farmers extends nearly 50 years through our grain operations in Eastern Canada and our oilseed processing facilities throughout the country,” said Todd Bastean, CEO, Bunge North America. “The investment in G3 and CWB complements our existing Canadian footprint and strengthens our origination and export capabilities in one of the world’s premier growing regions.”

Bunge considered bidding for Viterra three years ago. The deal will allow the company to bring together a logistical network based around its export terminal, storage in Quebec and CWB’s seven elevators.

SALIC was established in November 2011 in part to ensure an adequate food supply for Saudi Arabia’s growing population. “Canada is poised to play an increasing role in providing food to a growing world population and in capturing a larger share of the international market demand,” says Abdullah Al-Rubaian, chairman, SALIC. “SALIC is committed to infrastructure investment in countries such as Canada, which are exporters of surplus supplies of high quality grain. The launch of G3 will enable us to invest in infrastructure across Canada, providing more market choices for Canadian producers. We are committed to G3’s growth strategy and are excited to work with Bunge, CWB, and the Canadian farming community.”

The transaction is expected to close in July 2015. “G3 considerably strengthens SALIC’s position as a global agribusiness investor,” said Abdullah Aldubaikhi, CEO, SALIC. “The CWB opportunity offers an excellent strategic fit with SALIC’s global agribusiness investment plans, and we are extremely happy and proud that G3 has been chosen as the strategic investor in CWB.”

CWB CEO Ian White will continue with CWB until closing and for a period of time thereafter to ensure a successful transition period. “CWB is pleased to complete the initiative to commercialize CWB and are excited at the prospect of G3 as our strategic investor. G3 brings substantial financial strength and extensive operational experience to execute on this growth strategy, and we are pleased that the farmers will be able to continue to participate in the commercialized CWB,” White said.

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