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Leo de Bever dishes on Viterra takeover, CP struggles

AIMCo's CEO explains his decision to cash out on Viterra and his thoughts on what the board battle at CP might mean for its shareholders

Mar 22, 2012

by Max Fawcett

If the proposed takeover of Viterra by Glencore passes muster with federal regulators, shareholders in the Canadian agricultural giant will stand to do very well. But none will do better than AIMCo, the company’s biggest shareholder and the manager of millions of dollars in assets on behalf of a number of different public-sector and government clients in Alberta. Yesterday, AIMCo’s Leo de Bever talked with BNN’s Andy Bell and Kim Parlee about the deal, and he had (as always) some interesting things to say.

While AIMCo’s clients doubled their investment on the deal – AIMCo’s average purchase price was around $8, and Glencore’s bid is $16 and change – de Bever seemed frustrated that the company decided to sell out rather than build out. “Nobody expected this to happen at this stage,” he said. “We had hoped that the Viterra management could have turned Viterra into a company that did what Glencore is doing now – acquire other participants in this business.”

And while AIMCo’s clients turned a profit on the transaction, de Bever – a self-described value investor – now has to put that money back to work in a market in which value will be much harder to find. “Supposing this deal closes, and it looks like it will, we’ll have to put that money back to use,” he said. “It’s hard to find potential companies in this area where you can generate the kind of superior returns we were hoping to get over the long-run that we got in the short-run.”

Bell went after AIMCo for cashing out rather than helping to build a vibrant, internationally-oriented and Canadian-owned player in the agriculture sector, but de Bever rejected that criticism. “Philosophically, I have a soft spot for the point that you’re trying to make,” he said. “But I’m not Canada Inc., and I’m not Alberta Inc. I have to do what’s best for my clients. If I can do the profitable thing and the socially desirable thing, I will do so, but when someone makes an offer that’s very attractive I can’t turn it down.”

De Bever also spoke about CP, another Canadian corporation that’s been in the news of late and in which AIMCo holds a considerable investment. He wasn’t willing to commit to a side in the skirmish between the current board and Bill Ackman’s Pershing Square, but he did say that, in effect, it was put-up-or-shut-up time for current management. “If you want to play on the world stage, and you want to stay Canadian and Canadian controlled, you have to have your management perform at top-level.”

He also thinks all the talk of a potential change in management may have driven the stock beyond its proper valuation. “At the current valuation, are we already pricing in the benefits that could be had from making the company more efficient?” he asked. “We have trouble, from an investor point of view, getting too excited about it.”




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