A state-owned Saudi Arabian company is joining U.S. grain trader Bunge Ltd to buy a majority stake in Canadian grain handler CWB for C$250 million ($201 million).
The joint venture of Bunge and Saudi Agricultural and Livestock Investment Co (SALIC), called G3 Global Grain Group, said on Wednesday it will buy a 50.1 percent stake in CWB. It said the minority interest will be held in trust for the benefit of Canadian farmers, and that G3 will be based in Winnipeg, Manitoba. The transaction is expected to close in July 2015.
Saudi Arabia began to scale back its domestic wheat-growing program in 2008, planning to rely completely on imports by 2016. SALIC was formed in 2011 by late Saudi King Abdullah to secure food supplies for the desert kingdom, mainly through mass production projects with other countries.
CWB, known as the Canadian Wheat Board until the government stripped it of its Western Canadian grain monopoly in 2012, has remained under the control of the federal government, which has been seeking a majority investor. CWB, meanwhile, has been attempting to reposition itself as an independent grain handler.
Canadian Agriculture Minister Gerry Ritz said the government has approved the deal, which he said would increase the country’s grain-exporting capacity.
CWB operates a network of seven grain elevators in Western Canada, along with port terminals in Thunder Bay, Ontario, and Trois Rivieres, Quebec. CWB is building four additional grain handling facilities in Bloom and St. Adolphe, Manitoba, and at Colonsay and Pasqua, Saskatchewan.
G3 said Bunge’s export terminal in Quebec City and four grain elevators in Quebec will be part of the transaction.
Courtesy of Reuters NewsShare