Glencore sells agri stake to Canadian fund for $625mn

A worker uses a mobile lift to clean the windows of the headquarters of Swiss commodities trader Glencore in Baar near Zurich April 13, 2011. Commodities giant Glencore is expected to kick off a much-anticipated $10 billion listing this week, with the publication of an Intention to Float document that will confirm its plans after months of speculation. The listing -- which could be the largest to date in London and one of the largest in Europe -- will force the Swiss-based firm to shed its once-fabled secrecy and open up its huge and successful mining and trading operations to increased scrutiny. REUTERS/Arnd Wiegmann (SWITZERLAND - Tags: ENERGY BUSINESS)

 

Bloomberg

Glencore Plc agreed to sell just-under a 10 percent stake in its agriculture unit to Canada’s British Columbia Investment Management Corp. for $624.9 million in cash as it continues to cut debt.
The commodities trader and miner, which sold a 40 percent stake in the business to Canada Pension Plan Investment Board for $2.5 billion in April, will retain a majority 50.01 percent stake, it said in a statement on Wednesday. The agreement takes the value of disposals this year to $3.2 billion, compared to its target for 2016 of $4 billion to $5 billion.
“These transactions highlight the superior value of Glencore Agri, with its advantaged asset footprint and business model, relative to its closest peers,” Glencore CEO Ivan Glasenberg said in the statement. The deal values Glencore Agri at $6.25 billion.
Glencore is valued at about £21 billion ($31 billion). The sale is expected to close in the second half of the year.

Cutting Costs
Glencore has been selling assets and cutting costs under its program to reduce net debt to as low as $17 billion this year, compared with $25.9 billion at the end of 2015. The company was in talks with potential investors from Qatar, Saudi Arabia and Canada to sell a further stake in the agriculture unit, people familiar with the matter said last month.
The business handles wheat, corn, barley, biofuels, cotton and sugar.
BCIMC, Canada’s fourth-largest pension fund, has a history of investing alongside Canada Pension, including most recently as part of a consortium that aims to acquire Australian port and rail company Asciano Ltd. for roughly A$9 billion ($6.7 billion).
Excellent Opportunity
“Our investment in Glencore Agri provides an excellent opportunity for bcIMC to increase and diversify our exposure within the agricultural space, a sector we view as critical to supporting rising levels of global prosperity,” Lincoln Webb, a senior vice-president at BCIMC said.
Barclays Plc, Citigroup Inc. and Credit Suisse Group AG were joint advisers to Glencore, and Linklaters LLP provided legal advice. Royal Bank of Canada advised BCIMC.
The Victoria, B.C.-based pension fund has about C$124 billion ($98 billion) in assets under management, and oversees the retirement savings of 526,000 plan members in the province as well as the insurance and benefit funds of 2.2 million people in British Columbia.
Glencore became a major agriculture player when it agreed to buy Canadian grain handler Viterra Inc. for C$6.1 billion ($4.6 billion) in 2012. With a global network of more than 200 storage facilities and 23 ports, the company buys products from farmers, processors and other suppliers and sells to customers including local importers and government agencies.

Expansion Plans
The commodities and mining firm has signaled plans to grow the agriculture business with its new partners, opening the door to further consolidation in the industry. Glasenberg said the two Canadian pension funds would help Glencore Agri “significant opportunities” emerging in the next few years.
In the past, the CEO has said the company needs to expand in the U.S.

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