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Tuesday, 20 March 2012 08:08

Glencore acquires agricultural giant Viterra

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Courtesy Marketwire

Glencore International plc and Viterra Inc. announced Tuesday that they have signed a definitive agreement pursuant to which Glencore has agreed to acquire all of the issued and outstanding shares of Viterra for C$16.25 per share in cash by way of a court approved plan of arrangement.

The transaction price represents a premium of 48% over Viterra's closing share price on the Toronto Stock Exchange of C$10.98 on 8th March 2012, the day prior to Viterra's announcement that it had received expressions of interest regarding a potential transaction, and 55% over Viterra's 20-trading day volume weighted average trading price of C$10.48 per share ending on 8th March 2012. The transaction values Viterra's equity at approximately C$6.1 billion on a fully diluted basis. The transaction will be funded out of Glencore's existing cash resources and available credit facilities.

The acquisition of Viterra is consistent with Glencore's strategy of strengthening its position as one of the global leaders in grain and oilseeds markets. Viterra's Tier 1 portfolio of assets in Canada and Australia will allow Glencore to build upon its position as one of the world's largest commodity suppliers and provides the opportunity to leverage Glencore's extensive global networks, expertise and best practices in order to create additional value across its agricultural businesses.

Chris Mahoney, Director of Agricultural Products of Glencore said, "The acquisition of Viterra reflects our strong belief in the importance and future potential of the Canadian and Australian grain markets. This is an exciting opportunity to deliver the real benefits that can be generated through the combination of Glencore's and Viterra's respective assets, people and know-how to both farmers and customers in Canada, Australia and further afield."

Mayo Schmidt, Viterra's President and CEO said, "Viterra employees created a world-class agri-business, of which I am very proud. This has been recognized by Glencore and its partners, and this transaction creates value and opportunities for employees, our communities, farmers and customers in all the markets we serve."

Benefits to Canadian Grain Farmers

Glencore is confident the acquisition of Viterra will deliver significant overall benefits to grain farmers. The transaction will give farmers access to Glencore's unparalleled global distribution channels and increase their ability to export their product into international grain and oilseeds markets. Glencore's global reach and expertise will provide farmers with strong protection from market volatility, more options to market their grain and oilseeds and more competitive pricing resulting from Glencore's wider markets access and its more consistent demand for grains and oilseeds.

Glencore's logistics network enables it to deliver grain and oilseeds to more regions more efficiently, and its balance sheet strength enables the company to buy greater volumes. This results in a more consistent demand profile and therefore greater pricing continuity for farmers.

As a result of the asset sale agreements Glencore has entered into with Agrium Inc. ("Agrium") and Richardson International Limited ("Richardson International"), the transaction is expected to result in the creation of a more robust competitive landscape for Canadian farmers. As appropriate, Glencore also intends to grant third party access to its handling infrastructure at prevailing market rates.

More information for farmers can be found at www.glencore.com/agricultural-products.php.

Highlights

--  Cash price of C$16.25 per Viterra share represents an attractive premium
    to Viterra shareholders
--  Transaction has received the unanimous approval of Viterra's Board of
    Directors
--  Establishes a key growth platform for Glencore in Canada, one of the
    world's most attractive grain and oilseeds markets
--  Significant benefits to farmers and to Western Canada overall
--  Regina to be head office of North American Agriculture business
--  Agrium and Richardson International have agreed to acquire the majority
    of Viterra's Canadian assets and certain other assets for combined
    approximately C$2.6 billion in cash
--  Expands Glencore's operations in Australia, allowing the company to take
    advantage of new growth opportunities in the rapidly expanding global
    markets
--  Expected to be earnings enhancing to Glencore in the first full year
    after consolidation

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