Grain merger should bring more work for Grain elevator

The Daily news from Monday had information of a merger in the agricultural world that could prove to be a bonus for Prince Rupert Grain, as the four parent companies of PRG become three.

RIDLEY IS LIKELY TO SEE MORE GRAIN FLOW
By Leanne Ritchie
The Daily News
Monday, June 4, 2007
Pages one and three

The four parent companies of Prince Rupert Grain will soon become three with the Saskatchewan Wheat Pool’s acquisition of Agricore United.

Jeff Burghardt, president of Prince Rupert Grain, told a group from the province’s trade commission that he believes the consolidation will be good news for the Canadian Wheat Industry and in turn, Prince Rupert Grain.

“When this is all finalized and you take Agricore United out, these three companies – James Richardson Int., the Saskatchewan Wheat Pool and Cargill Ltd. will emerge with about 80 per cent of the significant grain volumes in Western Canada and they will then be the three owners of Prince Rupert Grain,” said Burghardt.

While some assets may be shed in the Lower Mainland, Burghardt said Prince Rupert Grain is the only grain handling terminal on the end of the Northwest corridor.

“We expect going forward there will be some further rationalization of capacity in the Port of Vancouver. As we deal with what are the appropriated products flows for both the southern corridor and the Northwest corridor, the fact there is more capacity here… we ought to take advantage of that capacity first and free up that scare waterfront space in the port of Vancouver for alternate activities,” said Burghardt.

He noted Prince Rupert Grain’s employees have worked hard to ensure they have faster turn-around times for vessel loading. And thanks to a decision last year by CN Rail, rail freight rates are competitive for moving grain through the Northwest.

Prince Rupert Grain began as a joint venture of the four companies back in 1985 when more grain began moving to the Asian market. However, the terminal has never achieved the high tonnage rates that were expected at the time it began operations.

In 2006, the terminal handled four million tones, but it has the capacity to handle seven million tonnes.

The battle to purchase Agricore United has been ongoing since last November.

At that time, Saskatchewan Wheat Pool came forward with a hostile offer. Agricore dismissed the initial proposal as undervalued and Winnipeg-based James Richardson International came forward with a counter-offer.

However, earlier this month, the Pool raised its offer to $20.50 a share.

That was enough to win support from Agricore management, which had previously backed the Richardson offer of $19.25 a share.

The deal is expected to be completed June 15, making Agricore a wholly owned subsidy of the Pool, the companies said.