Viterra CEO: ABB Grain takeover "premium material"

Mayo Schmidt, chief executive of Canada's Viterra Inc. Sunday (May 24) defended the firm's offer price for Australian agribusiness ABB Grain Ltd., saying it is at a "material premium" to the weighted average share price in recent times.

Viterra is offering between A$9.11 and A$9.41 a share, including a one-time cash dividend of 41 cents per share to be paid by ABB, valuing the company at around A$1.6 billion.

Critics of the deal, including lobby group the South Australian Farmers' Federation, have described the offer, to be taken as a mix of cash and stock options, as too low. Schmidt told Australian Broadcasting Corp. television Sunday Viterra is offering a 30 percent to 50 percent premium for ABB.

"It is a rather substantial premium for the combination," Schmidt said.

That compares favourably, he said, to recent global agriculture deals that have been at premiums of five to six times the weighted average, versus around 10 times for the ABB deal. Viterra needs the support of 75 percent of ABB shareholders for the deal to proceed. About 45 percent to 46 percent of ABB shareholders are growers or ex-growers.

Overseas institutions hold 25 percent to 26 percent, and with Australian investors owning a similar percentage. The remainder is held by retail shareholders.