Viterra (TSE:VT) to Acquire Dakota Growers Pasta for Cash

Wednesday, March 10th, 2010

Viterra (TSE:VT) announced today it is in the process of acquiring Dakota Growers Pasta for $240 million in cash. Viterra is a transportation and agricultural product company based in Calgary.

Dakota is one of the top dry pasta makers in the North American market, and the announcement coincides with the release of the latest quarterly results of Viterra, which were strong for the first quarter.

Terms of the deal include Viterra buying Dakota at a share price of $18.23, while also paying 10 cents a share for the Series D preferred stock in the company. A subsidiary of Viterra will make the tender offer to acquire the company.

For the year ending October 31, Dakota Growers generated revenues of $275 million with earnings of $42 million in earnings before interest, taxes, depreciation and amortization (EBITDA).

Dakota Growers is the third-largest producer of dry past products in North America, and also among the largest in durum mills.

Viterra is the largest grain-handling company in Canada, and has been looking to grow in the food processing, according to president and CEO Mayo Schmidt.

The first quarter for Viterra was a strong one, as it enjoyed profits of $10.7 million or 3 cents a share. Last year in the same quarter the company suffered losses of $33 million or 14 cents a share.

Revenue for the quarter surged by $404 million or 29 cents a share to $1.8 billion, in contrast to the same quarter last year of $1.4 billion. That was largely due to the acquisition of ABB Grain Ltd. of Australia in September 2009, so it didn't necessarily mean the company is growing organically.

Either way, these acquisitions should pay off for them in the long run, and soon we should see the results of their acquisitions paying off for them beyond the obvious one-off events acquisitions bring.

Article by Gary B

The views expressed are the subjective opinion of the article's author and not of

Tags: canada business , dakota growers pasta , viterra

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