SHAREHOLDERS in ABB Grain have overwhelmingly backed the $1.6 billion takeover by Canada's Viterra, a move that will create one of the world's biggest grain groups and is likely to spark further consolidation in the Australian grain sector.
The shareholders, both institutions and growers, voted 85 per cent in favour of the merger and of changing ABB's constitution to allow the takeover to take place.
The Federal Court is expected to approve the deal today, with the new combined group expected to be operating by September 23. Viterra will replace ABB Grain in the ASX100 on the implementation of the scheme.
The combined group will be a leading player in wheat, barley and canola, as Canada and Australia together constitute 37 per cent of the world market in the three grains.
An ABN Amro analyst, Belinda Moore, said the new group made strategic sense and it would eventually bring about further consolidation of the Australian agricultural industry. Companies that could be involved in some form or another include GrainCorp, AWB, Elders, Incitec Pivot, Nufarm, Ridley Corp, Australian Agricultural Company and Warrnambool Cheese & Butter, Ms Moore said.
Viterra's president and chief executive Mayo Schmidt said Viterra would push into South-East Asia, where ABB Grain was already active. "We will be acquisitive there and in North America," he said, pointing out that Viterra had just acquired an oil crushing plant in western Canada. "We will be very deliberate and patient with those initiatives," he said.
Mr Schmidt said Viterra was not worried by ABB Grain's short-term profit downgrades, which were related to fertiliser charges that affected all countries. "We're more interested in long-term value," he said.
Mr Schmidt did not rule out changing Viterra's normal policy of not paying dividends. Capital is usually reinvested. "The board of directors will encourage management to bring forward recommendations. We will explore that," he said.
Mr Schmidt said Viterra had taken over the process to find a new chief executive for the Australian operations after the retirement of ABB Grain's chief executive, Michael Iwaniw.
Ms Moore said the merged group would have greater geographic diversity, and access to increased grain volume from different regions providing the combined group with more security over supply for its customers. ABB Grain's shares closed 13c, or 1.44 per cent, higher at $9.13.
* Full Viterra report in Stock Journal, September 10 issue.
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