Farmers now have greater choice
- Western Canadian farmers gain a new world class competitor
- Investment ensures CWB can compete with the”best in the world”
- Ensures expansion of a competitive grain handling network
- Coast to coast network of strategic assets
- Unique opportunity for Canadian farmers to have substantial equity in an international grain company
- Winnipeg to remain head office
Winnipeg, Manitoba, Canada – For the first time in decades Western Canada is going to have a new major competitor in the grain industry with the announcement of the investment by G3 Global Grain Group (G3) in CWB.
The investment will result in G3 acquiring a majority ownership interest in CWB with a substantial minority interest held in trust for the benefit of farmers.
This investment ensures CWB will be well capitalized and will be a competitive force in the grain industry globally. As a result of this transaction, more farmers will have access to a growing network of assets across Canada and significant equity in an international grain company that will continue to be headquartered in Winnipeg.
Under the terms of this transaction, G3 will invest $250 million (subject to closing adjustments) for 50.1 % of CWB. The other 49.9% will be allocated to a trust for the benefit of farmers and administered through the Farmer Equity Plan announced by CWB in 2013. G3 is a joint venture between Bunge Canada, and SALIC Canada, a wholly owned subsidiary of Saudi Agricultural and Livestock Investment Company (SALIC).
“G3’s significant investment in CWB together with the Farmer Equity Plan will create a major new competitor by facilitating the continued expansion of our grain handling network,” said CWB President and CEO Ian White. “Creating value for farmers will continue to be at the core of CWB and this plan offers them a unique opportunity to have equity, at no cost to them, in an international grain company.”
“By bringing together these great companies we are creating a powerful new player in the Western Canadian grain space, offering farmers greater choice and securing better access to international customers”, said G3 President and CEO Karl Gerrand. “This investment gives us a significant presence in the Canadian market with unparalleled marketing and operational expertise and a trusted relationship with farmers”.
Management and Governance
Ian White will continue with CWB until closing and for a period of time thereafter to ensure a successful transition period.
CWB’s Board has not yet been confirmed but will consist of 7 directors including a representative of the Farmers Trust.
Farmer Equity Plan
This transaction ensures farmers will have an ownership stake, at no cost to them, in CWB and will share in its success. The Farmer Equity Plan established in 2013 is a unique opportunity that enables farmers to have a significant equity interest in an international grain company.
How it works
When farmers deliver grain to CWB they will continue to receive fair market value for their grain as well as $5.00 per tonne in equity in CWB. For example, if a farmer delivers 2,000 tonnes they will receive $10,000 worth of equity, at no cost to them. That equity will remain in CWB for a period of time to allow the equity to continue to be used in the growth and operations of the business.
A trust will be established before closing that will hold the equity of CWB for all farmers who are participants of the plan. The trust will be overseen by three independent trustees who will be appointed prior to closing.
CWB is one of the most experienced wheat and barley marketers in the world. The Winnipeg-based organization has sold grain to over 70 countries, based on a reputation for high-quality product, reliable service and trusted international relationships. Underpinned by industry partnerships and a growing asset base, it offers a range of marketing programs to western Canadian farmers, including its popular pool contracts, providing solid returns and significant risk-management benefits.
G3 Global Grain Group is a joint venture between Bunge Canada and SALIC Canada, a wholly owned subsidiary of Saudi Agricultural and Livestock Investment Company, formed for the purpose of investing in Canada’s agricultural grain industry by establishing a highly efficient coast to coast grain enterprise.
Deloitte Corporate Finance Inc. served as exclusive financial advisor for CWB, and Aikins LLP acted as legal advisors.
Source Canadian Wheat Board