ABB Grain Ltd and Viterra Inc announced they have signed an Implementation Agreement under which Viterra proposes to acquire all the issued and outstanding shares in ABB for a mixture of cash and scrip via a scheme of arrangement, which will be subject to shareholder and court approval.

 

The transaction, valued at approximately A$1.6 billion, is comprised of a combination of cash and shares, including a special dividend to be paid by ABB.

 

Following completion of the transaction, four ABB current directors are expected to join Viterra's expanded Board of Directors, including a member as the Deputy Chairman.

 

The transaction is expected to result in a number of benefits for the combined business, including the following:

 

 

 

 

 

 

The Australian, New Zealand and South East Asian operations of the new company will be based in Adelaide. As such, Adelaide will become a centre for barley marketing and barley research and development.

 

The new company is also committed to grower education and training and will commit significant resources to improve farm business management skills, marketing expertise, and best practices among Australian growers, just as it has in the Western Canadian market.

 

Commenting on the transaction, Mayo Schmidt, President and CEO of Viterra said,
''With assets in the key exporting geographies of Australia and Canada, the new company will have enhanced access to high growth markets and margin opportunities. We will be financially stronger and better able to access capital and manage risks required to succeed in the global marketplace."

 

Until now, ABB and Viterra have focused primarily on marketing grains from their respective countries. 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. Dual origin capabilities from Australia and Canada are expected to represent a significant competitive advantage in serving this growing demand.

 

Michael Iwaniw, Managing Director of ABB, said, ''The transaction is consistent with our respectively companies' strategy to expand our 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."

 

Perry Gunner, ABB's Chairman, added, "The Boards are confident that the combination will give the company more market presence, access to new markets and more opportunities to achieve premium prices for growers. The proposed combination de-risks the delivery of ABB's business strategy, creating a more diversified business and geographic earnings spread.''