Disruption of demutualization process, Sask Wheat Pool, a recent historical reference:
Wonder what happened? Wikipedia tells us:
en.wikipedia.org
Co-Operative to corporation
In March of 1996, the Saskatchewan Wheat Pool became a publicly-traded company, breaking from its roots as a co-operative. While decent profits were realized in the first two years, the company incurred huge losses between 1999 and 2003 because of low commodity prices.[1] It also faced increased competition when the Alberta Wheat Pool and Manitoba Pool Elevators merged to form Agricore. The Pool lost its position as the country's top grain handler when Agricore took over United Grain Growers in 2002 to form Agricore United.[2]
In November of 2006, the company launched a campaign to take over Agricore United. Winnipeg-based James Richardson International ("JRI") launched its own takeover bid at the same time. The initial and subsequent offers from the Pool involved a stock swap, with no or little cash being offered, prompting the AU Board of Directors to reject them. In February of 2007, AU and JRI announced that they had negotiated a merger arrangement to form a publicly traded company to be known as "Richardson Agricore", subject to shareholder agreement.
A subsequent bidding war led to a stock+cash offer from the Pool and an all-cash offer from JRI to form a private company[3]; a higher, $20.50 all-cash offer from the Pool in May eventually prevailed[4], with 81% of the limited voting shares being tendered to the Pool by shareholders by the end of May, including all the ADM shares. This exceeded the 75% required by the terms of AU's incorporation to change the corporate structure and, after a special shareholders' meeting in June, AU became a wholly-owned subsidiary of the Saskatchewan Wheat Pool[5]. AU's CEO, Brian Hayward, resigned, as did the Board of Directors, and SaskPool's CEO and Board were voted in. SaskPool had Agricore United's common and preferred shares delisted from the Toronto Stock Exchange (TSX) on June 20, 2007, and the members of the senior management team for the amalgamated company were announced the next day.[citation needed] The new company will be headquartered in Regina, under the name of Viterra.[6]
Commodity prices to blame? They have always been volatile. But I doubt they caused a drop of this magnitude. I am guessing that the demutualization itself was inherently destabilizing to the organization and culture of the Pool and that it simply took several years to get things back on track. I think similar factors could be at work in the decline of the exchanges, in spite of the fact that they continue to report excellent volume and earnings.
For more on demutualization, see en.wikipedia.org |
