March 12, 2012

In an intention to press ahead with Glencore's expansion strategy, chief executive Ivan Glasenberg is understood to want to bolt Viterra on to its growing grain business despite being in the midst of a GBP53 billion (US$5.5 billion) merger with Extrata.

Earlier this year The Daily Telegraph disclosed that Glencore is searching for an individual with knowledge of the agriculture market to join as a non-executive director.

Glencore's agricultural arm controls 8.7% of the "addressable" global grain market. Its agricultural business had sales of US$10.4 billion.

Chris Mahoney, head of Glencore's agriculture arm, is one of the company's richest senior staff members, with a 2.08% shareholding worth GBP588 million (US$922 million) based on Friday night's closing price of GBP4.087 (US$6.41).

Shares in Viterra rose 24% following Friday's announcement, giving a market capitalisation of CAD5 billion (US$5.05 billion).

Glencore's approach comes at an opportune time, as the Canadian government passed a law last year ending the Canadian Wheat Board's market monopoly.

Viterra currently controls 45% of Canada's grain handling market.

In addition, in November 2011, Viterra's biggest shareholder, Alberta Investment Management rejected its proposed board of directors, calling them "unresponsive."