Glencore now top in grain market

Haidee VandenbergheCountryman
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Glencore is now the biggest player in the Australian grain market after buying out major rival Viterra.

The $6 billion deal gives the Swiss commodity giant a 25 per cent share of the Australian grains industry, meaning that two companies - Glencore and Cargill - now control half of the market.

In 2009, Viterra bought out ABB Grain for $1.6 billion, giving the company a significant footprint in South Australia through the ownership of ABB's storage and logistics network. Those assets will now move to Glencore once shareholder approval is obtained.

But Glencore plans to sell off most of Viterra's agri-products business in Canada and other assets to Agrium and Richardson for a combined amount of $C2.6 billion ($2.5 billion).

Rumours had been circulating for weeks about a Viterra takeover, with analysts pointing to Cargill or Glencore as the potential suitors.

In the public domain, the takeover seemed to move at lightening speed but industry insiders say the smooth and well executed takeover bid points to a long, behind-the-scenes courting of Viterra.

Speculation is now rife that Glencore will now offload some of Viterra's Australian assets, such as ports or processing assets, and Emerald Group has already flagged interest.

Speaking at the WAFarmers annual conference, Emerald chairman Alan Winney said further consolidation of the industry was inevitable and Emerald would certainly look at any Viterra assets Glencore was looking to jettison.

"I'm not sure too many people would have suspected Viterra, which had about a $4 billion market capitalisation, would be subject to a very quick takeover," he said.

"Glencore came in and upped the price to about $6 billion."

Mr Winney pointed to GrainCorp as the next target likely to be gobbled up by larger grains companies.

"Publically-listed companies that have open share registers in this climate are targets," he said. "I think GrainCorp is in that category. Some of the food processing assets in the grain and other industries are in the same category.

"Publically-listed agribusinesses like Ridley are certainly open to someone coming in and wanting to pay more money than its shareholders think it's worth.

"Certainly in the soft commodity industries there are about eight firms I nominated as likely acquirers of assets.

"That included Cargill, Glencore and Bunge from the established Western world and Olam, Wilmar, Sumitomo, Cofco and Noble from Asian agribusiness groups that are emerging strongly."

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