Canada's state pension fund is getting its hands on the country's largest grain handler, as it takes a hefty stake in Glencore's agriculture business.
Commodity giant Glencore announced it has agreed to sell off 40% of its agriculture unit to the Canadian Pension Plan Investment Board (CPPIB), for $2.5bn.
The deal will help Glencore in its ambitious cost-cutting drive, while giving the CPPIB exposure to the agriculture sector, after being turfed out of the Saskatchewan land market last year.
Still, Glencore shares sagged, as the deal values the Glencore agri business at rather less than analysts were expecting.
Mark Jenkins, the pension fund's senior managing direction, said "as an asset class, agriculture is an excellent fit for a long-term investor like CPPIB".
In 2012 the CPPIB announced that it planned to step up investment in agriculture, citing opportunities in North America, Brazil, Australia and New Zealand.
But the CPPIB's taste for land was frustrated this year, as the state of Saskatchewan passed a law preventing pension funds from buying farmland, in a move that appeared to be aimed at CPPIB in particular.
In 2013 the pension fund snapped up 46,500 hectares in Canada's top agricultural state, prompting a backlash from farmers who feared being squeezed out by speculators.
But this latest deal gives CPPIB a 40% minority stake in Viterra, which is owned by Glencore Agri, bringing the agribusiness back into Canadian hands, and giving the pension funds a symbolically significant stake in the Saskatchewan farm sector.
Viterra, Canada's largest grain handler, emerged from the Saskatchewan Wheat Pool, once called "the world's largest farm".
The former co-operative grew into a large international agribusiness, before it was bought up by Glencore in 2013, for $6.2bn.
Glencore is on a drive to cut its debt to as low as $17bn by the end of this year, down from a peak of $30bn last year, in a bid to reassure equity markets.
Glencore's stock has been under pressure from the size of its debt, in the face of a very weak commodity price outlook.
The company has been drawing down its debt through a share issue, asset sales, and inventory reduction.
Glencore Agri saw profits drop by 39% last year, to $734m, with revenues down 10% at $23.15bn.
Glencore has the right to sell-off a further 20% stake in the segment, and the agreement also leaves the door open for the agricultural business to go public eight years after the completion of the deal.
Glencore shares were down 3.5% at 136.85p in afternoon deals in London.
By William Clarke