Commodities traders Cargill Inc. and Glencore International PLC (London: GLEN) are both interested in acquiring Viterra Inc. (Toronto: VT), Canada's largest grain company, according to reports Monday, setting up a potential deal that would further consolidate the food industry.
“A bidding war for Viterra could emerge and a large price will need to be paid,” wrote Belinda Moore, an Australia-based analyst from RBS Morgans Ltd., in a note.
Viterra on Friday said it had received expressions of interest from third-party companies. Its stock rose about 20 percent after disclosing potential acquisitions, giving it a total value of around $5 billion. The grain operator does business in Canada, the United States, Australia, New Zealand and China.
The Wall Street Journal and the Sunday Telegraph first reported Cargill's and Glencore's interest.
Privately held Cargill is active in about 70 countries, with massive food production and distribution operations, as well as salt, steel and fertilzer. Its grain and oilseed division has 20,000 employees in 46 countries, with 245 interior silos and 28 grain elevators, according to the company's website.
Swiss trader Glencore is also pursuing a $43.4 billion purcase of metals and coal producer Xstrata PLC.
Viterra was trading at $C13.58 at Monday's open, up from C$11.19 on Friday. Shares of Glencore were up 0.35 pounds to 409.05 pounds Monday morning.