Viterra closer to Australian firm takeover

Canada's largest grain handling company, Viterra Inc., moved a step closer towards becoming a major international player after shareholders of Australia's ABB Grain approved a takeover by the company.

At a meeting in Adelaide, Australia, on Wednesday, 83.57 per cent of ABB shareholders approved the deal, which was contingent upon obtaining at least 75 per cent support.

Viterra, formerly known as Saskatchewan Wheat Pool, will gain a "strong stream of cash flow" and greater reach as a result of the transaction, Viterra CEO Mayo Schmidt said.

The transaction now moves into the hands of Australia's Federal Court, which has scheduled a hearing on Thursday.

"We do believe that together our companies have the opportunity to build a long-term prosperity in agriculture industries both in Canada and Australia," Schmidt said in conference call.

"There are far-reaching benefits of this transaction that will touch all the shareholders, a couple of which certainly will be a much stronger balance sheet and a greater global reach with the size and scope to support both Canadian and Australian demand globally."

Schmidt said "all the i's are dotted and the t's are crossed" for the court approval. Once that takes place, integration of ABB with Viterra will begin in earnest and day one of the new company begins Sept. 23, he said.

The deal, first announced in May, would make the new company one of the largest exporters of wheat, canola and barley in the world.

It's a major geographical extension for Viterra, which took over Agricore United in 2007 for $1.8 billion.

Schmidt, who has been CEO since 2000, has said his main objectives are geographical diversification and expansion of value-added processing.

Viterra and ABB have said they expect annual synergies of roughly $27 million Cdn after three years.

Viterra will release its third-quarter final results Friday. Shares in Viterra dipped in early trading Wednesday after the shareholder vote, dropping three cents to $9.14 after the Toronto Stock Exchange opened.

More deals planned?

Schmidt said the attention in the near future will focus on integrating the companies, on "getting the earning stream up," and the harvests in Canada and Australia. He said there's no shortage of other acquisition opportunities down the road, but wouldn't put a time frame on any other potential deals.

"We are in that process of letting things settle here," said Schmidt. "Frankly, we're two years from the Agricore United combination. It successfully overachieved substantially the synergies; as well, we're focusing on the integration and that will take some period of time here."

"We've been involved in discussions here for about a year. We've now happily, successfully concluded this. There'll be some period of time here before we'll look at other significant opportunities."