The rapid-fire auction for Viterra Inc. is moving quickly to a close, with expectations mounting that Canada's biggest grain-handling company could choose a winner in coming days from a list of suitors that includes Archer-Daniels-Midland Co. and a joint Swiss-Canadian group.
Regina-based Viterra has set a termination date for the talks with "a very short fuse" said one person with knowledge of the process. A second person familiar with the situation said a sale is highly likely and an announcement on the sale could come as soon as next week. The people spoke on condition of anonymity because the talks are private.
The tight timeline puts the pressure on bidders such as ADM and the group led by Switzerland's Glencore International Inc. that includes Canada's Agrium Inc. and Richardson International Ltd.
Both suitors are said to have been working for months on their plans to take a run at Viterra, and were caught by surprise when the sale process for the company spilled into the open last week.
Bunge Ltd. , based in White Plains, N.Y., is also expected to take a hard look but it has much less financial firepower and may not be able to compete on price.
After disclosing that it had interest from potential buyers on March 9, Viterra quickly set up an auction process and a data room to showcase confidential information. It also set a high bar for access to the data, saying it was seeking bids of more than $16 a share, valuing the company at about $6-billion.
When news of the $16 target leaked out, Viterra's stock shot past that level – about 50 per cent above where it was before the takeover speculation. Some close to the process don't expect the final sale price to be much more, saying that at $17 it verges on too expensive.
This means that if ADM and the Canadian bid are close on value, Viterra's board may have to focus on which bidder has less risk of being blocked by regulators. It becomes a case of which regulator they are more comfortable facing – Investment Canada and its review of foreign bidders, or the Competition Bureau and its focus on ensuring fair access and prices for consumers of goods and services.
The Swiss-Canadian group could point to its Canadian content, while ADM would likely argue that its bid will have less impact on competition.
Investment Canada has blocked two large transactions in recent years on the grounds they were not of net benefit to Canada. The Competition Bureau under Commissioner of Competition Melanie Aitken has become very aggressive in recent months.
Glencore's pitch to Investment Canada would be that most of the Canadian assets of Viterra would remain Canadian.
The expectation is that, in addition to Viterra's grain-handling infrastructure, Winnipeg-based Richardson would be interested in its food-processing plants. That could reduce competition as Richardson is already a big processor, producing products that are similar to Viterra's, such as oils.
Calgary-based Agrium would buy all of Viterra's network of retail farm-supply stores, to combine with its own. ADM could argue that such a deal would reduce competition in the business of selling pesticides, seed and other necessities. Agrium hasn't officially confirmed it is part of the Glencore group, but it is interested in buying stores.
In an interview, Agrium investor relations manager Todd Coakwell said the company "is looking to grow its retail side," pointing to a corporate goal of building retail earnings (earnings before interest, taxes, depreciation and amortization) to $1-billion from the current $769-million.
"If there's opportunities out in the market to take a look at certain assets, I think Agrium certainly will," he said.