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Big Viterra investor plotted global expansion before Glencore bid

A Viterra grain storage facility in Saskatoon.

Liam Richards/LIAM RICHARDS/THE CANADIAN PRESS

Viterra Inc. largest investor was ready to pump up to $1-billion into it to help it become one of the world's top five agriculture companies – until the Regina company received a flurry of takeover bids in recent weeks that proved too generous to refuse.

"The plan was to build the company with acquisitions into something larger – an international Canadian-owned grain company. That's what we were focused on," said Brian Gibson, a director of Viterra and senior vice-president of public equities with Alberta Investment Management Corp., which owns 17 per cent of Viterra's stock.

He said AIMCo was working with Viterra on "even larger acquisitions" than its $1.8-billion purchase of Agricore United in 2007 and its $1.5-billion deal for Australia's ABB Grain Ltd. in 2009.

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"We were willing to put substantial additional capital into Viterra for the right reasons," Mr. Gibson said in an interview.

Viterra did make at least one unsuccessful multibillion-dollar takeover bid of its own in the past year but, in general, prices were too high "to make the numbers work," he added.

"It's a global thing – everyone is scrambling to buy assets because they're afraid they'll be left out if the industry consolidates and they're not part of it," he said. (Analysts speculate Viterra recently bid for Omaha-based grain handler Gavilon LLC, but Mr. Gibson declined to comment.)

As consolidation activity heated up in recent months, "the bids [for Viterra]just came out," he said. Its board unanimously agreed to a $6.1-billion offer led by Glencore International PLC at $16.25 a share, a 48-per-cent premium over its share price before Viterra revealed it was in play.

"The board did what it should do," Mr. Gibson said of the deal announced on Tuesday. "We said, 'What is the company worth if we execute on our business plan, what are bidders offering to pay for it, and what are our other options to create value?' "

Raymond James analyst Steven Hansen said that given Viterra's track record of turning around the business from a struggling co-operative to a globally competitive business, "it probably was a realistic objective over the long term" for the company to become a global giant. That likely would have required "a couple of big moves" in Eastern Europe by the company, Mr. Hansen said.

AIMCo had been pushing for Viterra to grow by acquisition since the Edmonton-based pension and government fund manager, which has $70-billion in assets, invested more than $220-million in Viterra stock in 2009 to help finance the ABB Grain deal.

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At that time, Mr. Gibson had recently joined AIMCo and was looking to repeat the success he had had at the Ontario Teachers' Pension Plan in "relationship investing" by providing both capital and strategic advice to help companies build value. After repeated attempts by AIMCo to push for more of a say and involvement in the Viterra's direction, the company opened a spot on its board for Mr. Gibson last November.

Mr. Gibson said he doesn't have any conflicting thoughts about the sale of Viterra, as "my job is to look after my clients" – who will benefit given that AIMCo will roughly double its investment in the company, if the sale is approved.

The Viterra sale is the second time Mr. Gibson's ambitions in the agriculture sector have been thwarted, but with lucrative results. In 2007, Teachers teamed up with James Richardson International Ltd. to make a friendly bid for Agricore, in an attempt consolidate the Canadian grain-handling business. They were trumped in a bidding war by Saskatchewan Wheat Pool, which then changed its name to Viterra, sold some of the assets to Richardson – and left Teachers more than doubling the size of its 9.9 per cent stake in Agricore shares.



With files from reporter Paul Waldie in Winnipeg





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About the Author

Sean Silcoff joined The Globe and Mail in January, 2012, following an 18-year-career in journalism and communications. He previously worked as a columnist and Montreal correspondent for the National Post and as a staff writer at Canadian Business Magazine, where he was project co-ordinator of the magazine's inaugural Rich 100 list. More

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