The source told Reuters that the commodity trading giant wanted to buy all of Viterra and then sell its retail business to Calgary-based fertilizer producer and ag retail firm Agrium.

Privately-owned Winnipeg-based grain trader Richardson International would take Viterra’s food processing unit in a rare and complex so-called “back-to-back” transaction.

Earlier reports had said Glencore, also bidding for mining group Xstrata, was planning a joint offer with Agrium and Richardson, something that might help the Swiss based trader get round Canadian concerns about a sale to a foreign entity.

As the second-largest Canadian grain handler, Richardson would likely also be interested in some grain elevator and port assets.

Viterra, based in Regina, said Thursday it had established a process for potential buyers, and its stock rose 10 per cent.

Shares have hovered around $16 since Thursday, when Viterra said it was aware of media reports of interest at that price. That would value it at some $5.9 billion.

U.S.-based Bunge and Archer Daniels Midland have also reportedly made approaches to Viterra.

“Aware of issues”

Sensitivity to anti-trust issues will be key to how Glencore, Richardson and Agrium — or other suitors — propose to break down the assets, said a source familiar with the matter.

“Whoever’s going to be involved in this will be aware of issues with the Competition Bureau,” the source said. “Everybody is aware how the bureau views these things.”

The bureau was a key player in the last big farm company takeover in Canada, when Saskatchewan Wheat Pool absorbed Agricore United and became Viterra in 2007.

To satisfy the bureau, SaskPool sold some elevators and port assets to No. 3 player Cargill. It also divested some grain elevators and farm retail stores to Richardson, which had also bid for Agricore.

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Viterra said in a statement it has established a process for considering expressions of interest, including confidentiality agreements.

It shed no light on who might bid for it, but a person familiar with the matter said that Swiss-based Glencore and U.S.-based Bunge and Archer Daniels Midland were involved in the auction.

"This is a public company, it won’t take that long to resolve an outcome," the person said.

Another person said that Glencore made a very strong case to support an acquisition. "They have given a lot of thought to this. They are very motivated," the second source said.

The Financial Times said Thursday that Glencore was teaming up with two Canadian companies, Winnipeg grain handler Richardson International and Calgary fertilizer and ag retail company Agrium, on a joint bid.

If that bid is successful, Viterra would split into three parts, the Times said, with Glencore taking the grain-handling business, Agrium getting Viterra’s 261 farm product stores and Richardson taking the food-processing business.

Teaming up with Canadian players would likely help Glencore navigate the politically-charged federal review process.

A foreign takeover of Viterra would be subject to a federal government review to determine whether it is of "net benefit" to the country.

Viterra shares jumped to just over $16, the price tipped as the floor for a takeover in an unconfirmed report on dealReporter.com. The stock was at around $11 before talk of a takeover first circulated last week.

A bid of $16 a share would value the company at about $5.9 billion.

"No assurance"

Viterra said it was aware of media reports of takeover interest at $16 per share, but it urged caution. It said it has engaged financial and legal advisers.

"Viterra cautions investors not to rely on these press reports as there can be no assurance that a transaction will occur and that if one does occur, there can be no assurance at what price it will be completed," it said in a statement.

Viterra stock had been halted pending the statement.

Jason Zandberg, an analyst who follows Viterra for PI Financial Corp, quoted dealReporter — a proprietary, subscriber-based site — as saying Viterra was requiring interest at $16 a share to let suitors into its data room to perform due diligence.

"It’s sounding as though there are multiple parties at least rolling up their sleeves," Zandberg said. "Whether they put in a bid, we don’t know."

He said he didn’t know how credible the dealReporter report was, and said he had never heard of a company asking prospective bidders to agree to a floor price before they even inspected their target’s books.

Viterra shares were up 9.6 per cent at $16.05 on the Toronto Stock Exchange on Thursday afternoon, touching a nine-year high.

A Richardson spokeswoman said the company would not comment on speculation. ADM and Bunge declined to comment.
Viterra, which competes with Cargill and Richardson, is the only major Canadian grain handler that is publicly traded.

Viterra owns about 45 per cent of Western Canada’s grain-handling capacity and it would likely raise competition concerns if another major Canadian grain player were to bid.

— Additional reporting for Reuters by Karl Plume in Chicago.

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