Viterra bidders need local "face" for deal The companies circling Viterra, the Toronto-listed grain trading house, are working quickly on a crucial element for a successful bid: a Canadian face for the deal. Whoever tables a formal offer - and I believe Glencore, Archer Daniels Midland and Bunge are leading the race - it is likely to need a local partner to make the deal more palatable to politicians and farmers. The involvement of a local partner would help soothe local opposition to a foreign takeover. Viterra is based in the rural Canadian province of Saskatchewan, home too of PotashCorp. In 2010, the Canadian government blocked BHP's $40bn hostile takeover for the fertiliser company, saying the sale would not provide a "net benefit" to the country. Brad Wall, Saskatchewan's premier, said on Monday that his government would review any takeover, echoing comments by federal officials in the capital Ottawa. But in a sign that a deal faces significantly less opposition, he clarified that Viterra was not "strategic" for the Canadian province, unlike PotashCorp. Industry executives and investors say, nonetheless, that a local face would be extremely helpful to secure the takeover. "This [takeover] is not without political sensitiveness," Amit Wadhwaney, portfolio manager at Third Avenue Management, the third-largest shareholder in Viterra, told me. The bidders have several local partners to choose from. The most likely candidates are Richardson International, the privately owned Canadian grain trader; Agrium, the Calgary-based fertiliser company; the $107bn mammoth Ontario Teachers' Pension Plan, and the Alberta Investment Management Corp., a $70bn asset manager for several Canadian pension funds. Richardson looks the most obvious candidate. The Winnipeg-based company is already the second-largest grain trader in Canada and is building a substantial retail business in fertiliser, pesticides and seeds. Richardson could try to snap up the retail business of Viterra and some small grain assets, industry executives said. Agrium could play a similar role. The fertiliser company is already familiar to the sector. It bought the former Australian Wheat Board for $1.2bn two years ago, keeping the fertiliser and retail business and offloading the grain trading business to Cargill. Canadian pension funds, which have a strong appetite for deals in infrastructure and the commodities sector, are likely to get involved. The Ontario Teachers' Pension Plan already tried in February 2007 to push the consolidation of the Canadian grain sector. It supported a merger between Agricore, a trader then listed in Toronto, and Richardson. The OTPP would have ended with a 20 per cent stake in the resulting company with an investment of $266m. The deal was, however, disrupted by Saskatchewan Wheat Pool, which came in with a higher offer. The merger in August 2007 of Saskatchewan and Agricore formed today's Viterra. Alberta Investment Management Corp., or AIMco as the company is known, is also seen as a potential local partner. AIMco is already the largest shareholder in Viterra with a 17 per cent stake and last year publicly demanded changes to the company's board to improve shareholder returns. Brian Gibson, a senior manager at AIMco who sits on the Viterra board, was a key figure of the merger proposal between Agricore and Richardson in 2007 from his position then as a portfolio manager at OTTP. Many in the industry see Mr Gibson as a key figure in any Viterra deal. Industry insiders added that two other large pension fund managers - the $160bn Caisse de dépôt et placement du Québec and the $150bn Canada Pension Plan Investment Board - could be regional partners to any deal. Yet a local partner would not resolve all the obstacles. The price tag would remain a challenge for the bidders. I heard from several top-20 shareholders in Viterra that they would only sit down to discuss an offer in the C$15-$17 range. Viterra, which has rallied more than 30 per cent over the past two days, closed on Monday in Toronto at C$14.45 per share.