July 18, 2012

 

Glencore pushes back deadline for its Viterra takeover

 

 

As Chinese officials extended an investigation into the deal, Glencore, the acquisitive commodities group suffering delays to its planned tie-up with Xstrata, has pushed back the deadline for closing its Viterra takeover.

 

Glencore said that it had received approval from Canada's industry minister for the CAD6.1 billion (US$6.1 billion) purchase of Viterra, the Alberta-based grain handler.

 

Such approval - which was denied to BHP Billiton two years ago in its attempt to buy potash giant PotashCorp - follows a series of pledges made by Glencore, including the sale of chunks of Viterra to rival Richardson International, and to Agrium, the Canadian fertiliser and farm retail group.

 

"I approve an application under the act if I am satisfied that the investment is likely to be of net benefit to Canada," Christian Paradis, Canada's industry minister, said.

 

"Glencore has made a number of commitments to Canada."

 

These also include a pledge to raise Viterra's capital expenditure over the next five years by more than CAD100 million (US$99 million), and to contribute towards the establishment in Saskatchewan of a global institute for good security.

 

However, Glencore said that the Viterra deal could not close despite Canadian approval, given outstanding investigations by China's Ministry of Commerce (Mofcom).

 

"The ministry "has moved to the next phase of review", Glencore said, adding that this step "was not uncommon for transactions being reviewed by Mofcom".

 

The group said that it "continues to engage with Mofcom to ensure approval as soon as possible".

 

Nonetheless, the Viterra takeover would not now close before the end of this month, as was initially expected.

 

Glencore, based in Switzerland but listed in London, is separately struggling to seal plans for a US$60 billion tie-up with Xstrata, mainly thanks to objections from major shareholder Qatar Holding at the merger terms.

 

Glencore last week delayed until September a shareholder vote on the deal to allow time for talks with Qatar Holding, which is holding out for a deal ratio of 3.25 Glencore shares for every Xstrata share, compared with the offer of 2.8:1.

 

However, the deal also still requires consent from regulators including China's Ministry of Commerce.