Canadian fertilizer and ag retail giant Agrium has expanded further into the U.S. ag retail sector with the purchase of 18 farm centres and six satellite outlets in Texas and New Mexico.
The Calgary company, whose main acquisition target right now is U.S. fertilizer firm CF Industries, stressed in a release Tuesday that the deal to buy the former Agriliance outlets “by no means signals that Agrium has lost any of its focus on acquiring CF Industries.”
“We remain committed to the proposed combination with CF, as well as growing all of the company’s business units through expansion of existing operations and acquisitions,” Agrium CEO Mike Wilson said.
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The 24 outlets had belonged to Agriliance, a retail firm co-owned by major U.S. ag co-ops Land O’Lakes and CHS Inc. The two companies “repositioned” their Agriliance operations in 2007, with Land O’Lakes taking the crop protection products business and CHS taking the wholesale crop nutrients business.
The remaining assets, including these 24 outlets, have since been offered for sale, at one point to a group of former Agriliance managers and their financial backers. Masterfeeds last year signed a deal to buy some of the former partnership’s feed business in Ontario.
Financial terms of Agrium’s deal for the 24 southern U.S. outlets were not released, but they also include “associated working capital” at those sites, plus over 50,000 tons of fertilizer storage capacity.
Agrium said the crop retail outlets are expected to have annual crop input revenues of about US$150 million. “We believe that this acquisition will be immediately accretive to earnings,” Wilson said.
“We are committed to deliver on our strategic growth objectives of doubling the size of our retail business, and this acquisition is a reaffirmation of that commitment,” he said. “The purchase of these retail outlets will enhance our ability to serve customers in these states and we look forward to working with the farmers there.”
“Defined transaction”
Agrium’s hostile bid for Chicago-based CF, meanwhile, does not appear to have deterred by CF’s forward momentum in its own hostile bid for another U.S. fertilizer player, Terra Industries. CF recently convinced Terra shareholders at that company’s annual meeting to elect three pro-takeover nominees to the Iowa firm’s board of directors.
Agrium, however, said Monday its bid for CF has received stronger support from that company’s shareholders, with 60 per cent of shares (apart from those Agrium already owns) now tendered to Agrium’s US$102-per-share cash and stock offer.
“In comparison, we understand that the votes received by CF’s nominees for the Terra board represented the votes of only 38 per cent of Terra’s outstanding shares, after adjusting for the seven per cent of Terra shares purchased by CF ahead of the vote,” Agrium’s Wilson said in a separate release Monday.
“Furthermore, the Terra vote was about engagement, while Agrium’s tender offer results were a referendum on concluding a defined transaction at a specific price.
“We believe that with the benefit of reflection, CF’s board should respond appropriately and responsibly to the clear message sent by their stockholders, expressed through the tender offer,” Wilson said.
Agrium, he said, will continue to reach out to CF’s managers, board and financial advisors to support its bid.
