Canadian grain handler Viterra Inc said on Monday it will pay shareholders of ABB Grain A$751.7 million ($652.5 million) in cash, plus shares in Viterra, to complete its takeover of the Australian company.
ABB shareholders had until Friday to choose among options weighted toward Viterra shares or cash. Nearly 62 percent of shares chose the option of maximum shares in Viterra.
Choosing shares over cash reflected the fact that Viterra stock was trading above the value of the cash offer, said David Newman, an analyst with National Bank Financial.
It was simple math.
Viterra will issue 9.6 million new shares to ABB shareholders as well as 68.6 million new shares in trust for shareholders who opt to receive Viterra securities that are registered in Australia and can be bought and sold on the Australian exchange.
ABB shareholders will now make up 21.1 percent of Viterra's shareholder base, Newman said.
Viterra shares were up 0.5 percent at C$9.68 on the Toronto Stock Exchange around midday on Monday.
With shareholders' priority being a stake in the company rather than cash, Viterra will have ample room in its balance sheet for further acquisitions, Newman said.
Viterra CEO Mayo Schmidt said earlier this month that the company will have C$350 million to C$750 million ($324 million to $694 million) in capital available for acquisitions, depending on the options ABB shareholders choose.
Viterra is likely to take time to digest the ABB acquisition but may then be in the market for Australian suppliers of crop inputs like seeds, chemicals and fertilizer, Newman said. Elders Ltd's rural services division is a potential target that may suit Viterra, he said.
I don't believe this management team is going to stand pat.
The acquisition, which takes effect Sept. 23, should add 3 Canadian cents to Viterra's earnings per share, Newman said.
ABB shareholders approved the A$1.6-billion takeover on Sept. 9, making the Regina, Saskatchewan-based Viterra one of the world's largest grain handlers.
The acquisition is valued at A$2.3 billion once ABB's debt is factored in, Newman said.
($1=$1.15 Australian) ($1=$1.08 Canadian)
(Reporting by Rod Nickel; editing by Rob Wilson)