{"id":28575,"date":"2012-03-26T12:35:02","date_gmt":"2012-03-26T16:35:02","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/26\/ma-activity-heating-up-in-mining-and-agribusiness\/"},"modified":"2012-03-26T12:35:02","modified_gmt":"2012-03-26T16:35:02","slug":"ma-activity-heating-up-in-mining-and-agribusiness","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/26\/ma-activity-heating-up-in-mining-and-agribusiness\/","title":{"rendered":"M&#038;A Activity Heating Up in Mining and Agribusiness"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-28530 \" title=\"M&amp;A Activity Heating Up in Mining and Agribusiness\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/ma-activity-mining-agribusiness.jpg\" alt=\"M&amp;A Activity Heating Up in Mining and Agribusiness\" width=\"220\" height=\"220\" \/><\/p>\n<p>As investors wait for the anticipated merger of Glencore (LSE: GLEN) and Xstrata (LSE: XTA), M&amp;A activity continues to heat up in mining and agriculture.<\/p>\n<\/div>\n<p>On February 6, I wrote about a potential blockbuster merger between commodity trading giant <strong>Glencore<\/strong> (LSE: <a href=\"http:\/\/finance.yahoo.com\/q\/bc?s=GLEN.L\" target=\"_blank\">GLEN<\/a>) and global mining firm <strong>Xstrata<\/strong> (LSE: <a href=\"http:\/\/finance.yahoo.com\/q\/bc?s=xta.l\" target=\"_blank\">XTA<\/a>).<\/p>\n<p>The next day, the two companies confirmed their interests in an all-share merger totaling $90 billion. It\u2019s the biggest potential mining merger in history.<\/p>\n<p>Instantly, the combined firms would become the world\u2019s largest thermal coal exporter, the largest zinc producer and third-largest copper miner.<\/p>\n<p>Yet it could be a while before the merger is complete.<\/p>\n<p>As the <em>Wall Street Journal<\/em> reports, \u201cIt may take until early 2013 for the mining mega-merger to win regulatory approval from the EU &#8211; as well as the US, China, South Africa and Canada &#8211; and to win over reluctant shareholders.\u201d<\/p>\n<p>Also, with no other companies bidding up Xstrata, Glencore is in no rush to change its terms any time soon.<\/p>\n<p>So as the world waits, both firms have continued searching for more M&amp;A opportunities.<\/p>\n<p>And Glencore just found a big one. It just purchased <strong>Viterra Inc.<\/strong> (TSX: <a href=\"http:\/\/www.google.ca\/finance?cid=665922\" target=\"_blank\">VT<\/a>; ASX: <a href=\"http:\/\/www.google.com\/finance?cid=5806498\" target=\"_blank\">VTA<\/a>, OTC: <a href=\"http:\/\/finance.yahoo.com\/q?s=VTRAF.PK\" target=\"_blank\">VTRAF<\/a>) for $6.2 billion.<\/p>\n<p>(Our experts recommended Viterra to <em><a href=\"http:\/\/oxfordclub.com\/oxf-research\/IU\/IU5Bucks1211.php?code=WIUPMA05&amp;n=IUP\" target=\"_blank\">Investment U Plus<\/a><\/em> subscribers on January 19. With a healthy boost from Glencore\u2019s premium, Viterra is up 50% since our recommendation.)<\/p>\n<h2><strong>Glencore Moves in On AgriBusiness<\/strong><\/h2>\n<p>Based out of Regina, Canada, Viterra is Canada\u2019s largest grain handler.<\/p>\n<p>With a market cap of $5.9 billion, the company has extensive operations across Western Canada and Australia. It also owns facilities in the United States, New Zealand and China.<\/p>\n<p>Viterra\u2019s business is managed through three interrelated segments: grain handling and marketing, agri-products, and processing.<\/p>\n<p>By purchasing Viterra, Glencore will instantly make itself a major player in the global agribusiness. That\u2019s because Canada and Australia are among the top grain exporting nations worldwide.<\/p>\n<p>Until now, Glencore has only had a 9% share of the global grain market.<\/p>\n<p>Like Xstrata, Glencore must again wait for regulatory approval before it can acquire Viterra. But it shouldn\u2019t have the same issues it\u2019s having with Xstrata.<\/p>\n<p>You see, as soon as the deal goes through, Glencore will sell the majority of Viterra\u2019s Canadian assets to <strong>Agrium Inc.<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=AGU\" target=\"_blank\">AGU<\/a>; TSX: <a href=\"http:\/\/ca.finance.yahoo.com\/q?s=AGU.TO\" target=\"_blank\">AGU<\/a>) and Richardson International, two Canadian agribusiness firms.<\/p>\n<p><em>Reuters<\/em> says, \u201cBy divesting some grain elevators, mills and farm-supply dealers, the Swiss-based trader aims to allay concerns that Ottawa might block the deal on national sovereignty or competition grounds.\u201d<\/p>\n<p>You may be wondering then, why is Glencore even buying Viterra if it\u2019s just going to disband the company and sell much of it?<\/p>\n<p>As you\u2019ll see, it\u2019s all part of Glencore\u2019s strategy.<\/p>\n<h2><strong>A Slew of Potential Takeovers<\/strong><\/h2>\n<p>This August, the Canadian government will end the Canadian Wheat Board\u2019s monopoly on marketing and producing wheat and barley in Western Canada.<\/p>\n<p>As Canada\u2019s largest grain handler, Viterra is in a prime position to pick up business when the government mandated monopoly is officially over.<\/p>\n<p>By buying Viterra, Glencore is now set to gobble up this market share and become a major competitor with the likes of <strong>Archer Daniels Midland<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=ADM\" target=\"_blank\">ADM<\/a>), <strong>Bunge Limited <\/strong>(NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=BG\" target=\"_blank\">BG<\/a>), and Cargill.<\/p>\n<p>But Glencore isn\u2019t stopping at Viterra&#8230;<\/p>\n<p>The company\u2019s director of agricultural products, Chris Mahoney, says Canada is \u201c&#8230;a platform for our North American agricultural operations, and in the future, we will look to expansion, with Regina as the headquarters, into the United States.\u201d<\/p>\n<p>Commodity investors will be monitoring the grain industry throughout this summer.<\/p>\n<p>That\u2019s because Glencore\u2019s aggressive ambitions are poised to set off a wave of takeovers in the grain sector&#8230;<\/p>\n<ul>\n<li><strong>Gavilon Group<\/strong>, a privately owned US grain trader, already put itself up for sale for an estimated $5 billion. Glencore is speculated as a potential suitor.<\/li>\n<\/ul>\n<ul>\n<li><strong>Legumex Walker<\/strong> (TSX: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=LWP\" target=\"_blank\">LWP<\/a>), a small specialty seeds firm based out of Winnipeg, Canada could end up a takeover target.<\/li>\n<\/ul>\n<ul>\n<li>In Australia, <strong>GrainCorp<\/strong> (ASX: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=GNC\" target=\"_blank\">GNC<\/a>) and <strong>Goodman Fielder <\/strong>(ASX:\u00a0<a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=GFF\" target=\"_blank\">GFF<\/a>) are regarded as a potential takeover candidates.<\/li>\n<\/ul>\n<ul>\n<li>And the <em>Financial Times<\/em> reports, \u201cIndustry executives stretch the list of potential targets in the grain sector to include&#8230; <strong>CHS Inc.<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=CHSCP\" target=\"_blank\">CHSCP<\/a>)\u201d as well.<\/li>\n<\/ul>\n<p>It\u2019s uncertain what effect all of this will have on food prices. But don\u2019t be surprised if the answer ends up being not much. Still, you can find some great opportunities to offset your food costs by keeping a watchful eye on this exciting development.<\/p>\n<p>Good Investing,<\/p>\n<p>Mike Kapsch<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=qjjgY9BX9mU:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=qjjgY9BX9mU:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=qjjgY9BX9mU:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=qjjgY9BX9mU:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=qjjgY9BX9mU:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=qjjgY9BX9mU:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=qjjgY9BX9mU:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=qjjgY9BX9mU:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/qjjgY9BX9mU\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>As investors wait for the anticipated merger of Glencore (LSE: GLEN) and Xstrata (LSE: XTA), M&amp;A activity continues to heat up in mining and agriculture. On February 6, I wrote about a potential blockbuster merger between commodity trading giant Glencore (LSE: GLEN) and global mining firm Xstrata (LSE: XTA). The next day, the two companies &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/26\/ma-activity-heating-up-in-mining-and-agribusiness\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;M&#038;A Activity Heating Up in Mining and Agribusiness&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28575","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28575","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28575"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28575\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}