GOVERNMENT RELEASES REVIEW OF GLENCORE ACQUISITION OF VITERRA

Released on May 11, 2012

Agriculture Minister Bob Bjornerud today released an independent review of the proposed acquisition of Viterra by Glencore International.

Bjornerud said the report highlights both potentially positive and potentially negative aspects of the deal that now must be considered by the federal government in its review process under The Investment Canada Act.

"If the federal government approves this acquisition, we would want to see conditions put in place to hold Glencore to its commitments and to address the concerns raised in this report," Bjornerud said.

In March, the Saskatchewan government commissioned an independent review of the proposed deal by Informa Economics Inc.

The report highlights the deal's potential to give Canadian farmers better access to world markets and to improve grain-handling operations. It also notes Glencore's commitment to establish its North American headquarters in Regina as strengthening Saskatchewan's position in the grain industry.

The report also flags that while the share acquisition itself does not appear to have any effect on competition, the planned divestiture of assets involving Agrium could affect competition in the farm inputs sector.

"Glencore has a significant global network that will serve as a market for Saskatchewan farmers and a vehicle for increased economic growth in the province," Bjornerud said. "At the same time, we need to ensure there is no adverse effect on competition in farm inputs. That's one of the concerns we would like to see addressed by the federal government. I was pleased to see that earlier this week, federal Agriculture Minister Gerry Ritz told the House of Commons that the review process would ensure competition will not be reduced."

The report confirms Glencore's plan to increase capital expenditures by $100 million over five years and to increase research and development spending in Saskatchewan.

The report indicates the acquisition will have a mixed impact on job creation, saying there will likely be head office job losses in the short-term, offset by new jobs being created as Glencore expands its operations in the years ahead. Glencore has committed to a North American head office in Regina, to relocate some positions from its European offices and to return a number of higher-paying executive jobs from Calgary. This is a reversal from recent years, when a number of Viterra's key executive positions moved from Regina to Calgary - a trend that seemed to be a continuing reality into the future.

The report also indicates that Glencore will maintain and enhance Viterra's current community-based and philanthropic commitments. The deal is expected to have a relatively minor impact on provincial revenues.

The Province of Saskatchewan wants the federal government to ensure, as part of the approval process, that Glencore International's acquisition of Viterra:

• establishes Regina as its North American headquarters;
• maintains or enhances current levels of employment in field operations; 
• invests in the western Canadian grain handling industry by increasing capital expenditures by $100 million over five years; 
• continues strong commitment to funding research and development, including investment in the proposed Global Institute for Food Security; 
• continues Viterra's support for community-based and philanthropic activities and investments; and
• has no adverse effect on competition in farm inputs.

Ultimately, the federal government will provide a decision on whether the proposed acquisition represents a net benefit for Canada. In doing so it can approve or reject the deal, and as part of the process, seek representations and undertakings from the proponent to establish that a net benefit will result.

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For more information, contact:

Donna Rehirchuk
Agriculture
Regina
Phone: 306-787-5389
Email: donna.rehirchuk@gov.sk.ca