Saudi Arabia buys stake in Canadian grain handling company

A state-owned Saudi Arabian investment company and Bunge, the agricultural trading house, have taken control of Canada's former wheat monopoly, underscoring the oil exporting nation's quest for secure sources of food imports.

The sale of a 50.1 per cent stake in CWB, formerly the Canadian Wheat Board, comes three years after Ottawa ended its privileged position as the exclusive purchaser of wheat and barley from western Canada's farmers, opening up the market to competition for the first time in seven decades.

New York-listed Bunge and the Saudi Agricultural and Livestock Investment Company (Salic) will pay C$250m ($202m) for the stake, the investors said on Wednesday.

The venture, to be called G3 Global Grain Group, will vie with commodities trading houses such as Cargill and Glencore in bidding for Canada's grain.

Salic, wholly owned by the Saudi government, was formed in 2011 to meet the kingdom's growing food requirements and cut expenditures on food imports, according to its website.

Saudi Arabia is the world's leading barley importer and its wheat imports are growing. Canada is the world's second largest wheat exporter and also a large barley producer.

Karl Gerrand, G3's new chief executive, said of Salic: "This fits exactly with their vision. Canada produces some of the best-quality grain in the world. We have surplus exportable grain that's available in Canada, and we will have it for the foreseeable future." Mr Gerrand, who ran Bunge's Canadian operations, said Bunge will own a majority of G3.

Bunge has had a relatively small presence in Canadian grain markets. In 2012 it looked at a possible bid for Viterra, another Canadian grain trader, which was eventually sold to Glencore for $6bn.

G3 will combine Bunge's grain export terminal in Quebec City and four silo complexes in Quebec province with CWB's seven silos across Canada. CWB is also building four more grain handling facilities in Manitoba and Saskatchewan provinces, the companies said.

Dana Spiring, CWB chief strategy officer, said the company visited more than 50 potential investors over 18 months to seek a buyer with appropriate global reach.

<

The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

Saudi Arabia imported about half a million tonnes of grain from Canada in the crop year ended last July, according to the Canadian Grain Commission.

Mr Gerrand said: "Salic will have to be competitive with the rest of the market in acquiring our grain. We're an independent Canadian agribusiness run by Canadians and managed by Canadians."

Abdullah Al-Rubaian, Salic chairman, said the company is "committed to infrastructure investment in countries such as Canada, which are exporters of surplus supplies of high quality grain."

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation