May 20, 2009

Viterra Inc. Tuesday (May 19) signed an agreement with ABB Grain Ltd. to buy all the shares in the Australian barley exporter to build the Canadian company's scale in Asia.

The transaction, which is valued at about A$1.6 billion (C$1.4 billion), is comprised of a combination of cash and Viterra shares, including a special dividend of A$0.41 to be paid by ABB, and values ABB shares in the range of A$9.11 to A$9.41. ABB shares last traded Tuesday at A$8.60.

ABB's directors unanimously recommended investors vote in favor of the proposed scheme of arrangement, in the absence of a superior proposal and an independent expert's report, it said in a statement.

A vote is expected to be held in September, ABB said.

"Demand for core commodities is forecast to increase by 20 percent over the next 10 years, with much of the new demand coming from Asia," said Viterra Chief Executive Mayo Schmidt.

"Dual origin capabilities from Australia and Canada are expected to represent a significant competitive advantage in serving this growing demand," he added.

Viterra expected synergies of A$30 million a year, which will be fully realized within three years, the company said.

ABB Managing Director Michael Iwaniw said that the transaction was consistent with both companies' strategy to expand their global footprint through geographic diversification and investments in value-added processing.

"The transaction will diversify the new company's earnings profile, offering counter seasonal cash flows and a more even distribution of earnings," he said.