Canadian pension fund-backed grain handling company faces government scrutiny

Will grain handling company merger benefit Canadians?

Canadian pension fund-backed grain handling company faces government scrutiny

The Canadian government plans to undertake a review of the $8 billion US acquisition of the Canadian-based grain-handling company, Viterra, by a foreign conglomerate.

Viterra, formerly known as Saskatchewan Wheat Pool, was acquired by multinational commodities giant Glencore in 2011. However, minority interests in the company are held by two major Canadian pension plans: the Canada Pension Plan Investment Board and British Columbia Investment Management Corporation.

Amidst recent consolidation in the commodities sector, US-based agribusiness leader Bunge agreed to pay over $8 billion to acquire Viterra's assets and merge them with their own.

Viterra, with approximately 1,600 employees in Canada across 75 locations, boasts a global presence in three dozen countries. The company employs more than 16,000 people and moves over 70 million tonnes of grain annually worldwide.

While shareholders from both companies have yet to approve the merger, Transport Minister Pablo Rodriguez introduced a hurdle by announcing a federal government review of the deal. The review's objective is to ensure that the merger benefits Canadians.

“Both companies hold ownership interests in port terminals throughout our country,” Rodriguez said.

“Healthy competition in the transportation sector is necessary to ensure fair pricing and access for users, especially for Canadian farmers.”

Among Viterra's assets are the Cascadia and Pacific Terminals at the Port of Vancouver, a grain facility in Prince Rupert, British Columbia, as well as two facilities in Thunder Bay, Ontario, and one in Montreal.

“Given this transaction is of significant national interest in Canada's transportation sector and the broader supply chain, it will be reviewed under the mergers and acquisitions provisions of the Canada Transportation Act,” Rodriguez added.

This marks the second government review of the deal, following the Competition Bureau's announcement in June that it would also examine the acquisition.

The government's review process has a maximum duration of 250 days, potentially extending the approval date to at least June 2024. Following the news of the government's reevaluation, shares in Bunge experienced a decline, reaching their lowest level since August.