Market Chatter: Glencore Bid For Viterra May Cut Competition in Retail Fertilizer Sales, Says Report

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Glencore International Plc's (GLEN) proposed C$6.1 billion ($6.12 billion) takeover of Viterra Inc. (VT.TO) may reduce competition in retail fertilizer sales, according to a report prepared for the Saskatchewan government, Bloomberg reported.

Glencore's acquisition of Canada's largest grain handler includes a side deal to sell 90% of Viterra's domestic retail outlets to Agrium Inc. (AGU.TO), a Calgary-based fertilizer producer that is already North America's largest farm retailer.

"There is some concern about competition in the farm input sector, particularly regarding nitrogen fertilizers, due to the acquisition of most of Viterra's retail input facilities by Agrium," according to an e-mailed summary of the report by Informa Economics Inc., a Memphis, Tennessee-based independent research company, that was released today.

The report says that Glencore's purchase of Viterra will initially have "minimal impact" on competition in grain-handling and the only job losses will be limited to head-office employees. Regarding the sale of the retail assets, Informa says that while Agrium may have the ability to influence fertilizer prices, there is no evidence the company would take "anticompetitive actions."

Canada's federal government rejected a $40 billion hostile bid by Melbourne-based BHP Billiton Ltd. ( BHP ) for Potash Corp. of Saskatchewan Inc. (POT.TO) in 2010, saying the proposal for the world's largest potash miner didn't provide a "net benefit" for Canada.

Saskatchewan Premier Brad Wall, who opposed the Potash Corp. bid, said last month the sale of Regina-based Viterra is "a lot different" in terms of both the scope and assets involved.

Saskatchewan said in a statement today that it wants the federal government to make approval of the acquisition conditional on Glencore keeping to commitments to establish its North American headquarters in Regina and investing C$100 million in the Canadian grain-handling industry in the next five years.

"It can be concluded that the initial Glencore acquisition will have a minimal effect on competition within the grain-handling system," the Informa report said.



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