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Glencore gains final approval for Viterra takeover

by Laura Board  |  Published December 7, 2012 at 2:04 PM
Glencore_227x128.jpgAfter four extensions of the anticipated closing date, Switzerland's Glencore International plc on Friday, Dec. 7, finally cleared the last regulatory hurdle to its C$6.03 billion ($6.1 billion) takeover of Canadian grains handling company Viterra Inc. by gaining long-awaited clearance from the Chinese government.

Canadian government approval had initially appeared to be the highest regulatory hurdle but in July Glencore and Viterra convinced officials that the deal would be of "net benefit" to Canada. Chinese Ministry of Commerce approval proved a surprisingly elusive goal, however.

The companies had originally expected their late March deal to close by the end of July but after three previous extensions last month extended the deadline to Dec. 10 because of the Chinese delay.

Yet even with approval from China's Ministry of Commerce in the bag, the partners won't quite hit that goal and on Friday set a definitive date for closing the deal of Dec. 17.

Calgary, Alberta-based Viterra's shares were up C$0.23, at C$16.23, by Friday morning in Toronto, just below Glencore's C$16.25 offer price. The shares had risen steadily in the past week as fears that the deal won't happen abated.

"The approvals over the past months by the Canadian courts, regulators around the world and our shareholders, who voted 99.8% in favour of the deal, demonstrate widespread support for this transaction," Viterra president and CEO Mayo Schmidt said in a statement.

The acquisition will significantly expand Glencore's operations in the grain and oilseeds markets, particularly in Canada and Australia, and is expected to boost earnings from the first full year following integration.

The Chinese approval is also good news for Agrium Inc., whose board is under siege from activist investor Jana Partners LLC, and for Richardson International Ltd. Both of the Canadian companies struck separate side deals at the time of the March agreement that hinge on the Glencore takeover of Viterra happening.

Meanwhile, Marubeni Corp., of Japan is likely to be watching developments closely. It said last month it is still awaiting Japanese Ministry of Commerce approval for its May deal to pay $5.6 billion for Omaha-based grains trading company Gavilon Holdings LLC. Marubeni had originally hoped to close the Gavilon takeover in September.

Viterra was assisted in obtaining approval from China's Ministry of Commerce by David Went of Sidley Austin LLP and Torys LLP's Jay Holsten and Omar Wakil, all in London. Other Viterra lawyers included Ashurst LLP's Mark Stanbridge, Murray Wheater, David McManus, Jonny Gordon, Anton Harris, Peter Armitage, Vivian Chang and Barbara Phair in Australia.

Glencore's lawyers are a Bennett Jones LLP team in Canada led by Ken Klassen; a Linklaters LLP team in Europe and Asia including Charlie Jacobs, Tracey Lochhead, Robert Cleaver and Christian Ahlborn; a King & Wood Mallesons team in Australia led by Nicolas Pappas and a Curtis, Mallet-Prevost, Colt & Mosle LLP team including Mat Vega, Jeff Zuckerman, Jeff Ostrager, Ray Hum, Martin Brown and Kreg Katoski in the U.S.

The Chinese approval of the Viterra takeover comes as Glencore finalizes its far larger, $30 billion-plus takeover of the outstanding shares in mining group Xstrata plc.

Glencore, of Baar, Switzerland, is led by CEO Ivan Glasenberg. As of midafternoon Friday in London, it had a market value of just under £24.5 billion ($39.2 billion).

Tags: Agrium Inc. | Ashurst LLP | Bennett Jones LLP | Curtis Mallet-Prevost Colt & Mosle LLP | Gavilon Holdings LLC | Glencore International plc | Ivan Glasenberg | Jana Partners LLC | King & Wood Mallesons | Marubeni Corp. | Mayo Schmidt | Ministry of Commerce | Richardson International Ltd. | Sidley Austin LLP | Torys LLP | Viterra Inc. | Xstrata plc

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