The former Australian Wheat Board plans to leave an Australian suitor at the altar for a better offer from a Canadian fertilizer firm.
Agrium announced Friday it has signed a “definitive agreement” for a friendly all-cash takeover of AWB Ltd. for about A$1.237 billion (C$1.16 billion), or A$1.50 per share.
AWB’s board had until now recommended its shareholders accept an A$855 million all-stock bid from Sydney-based bulk handler GrainCorp. AWB is now expected to formally endorse Agrium’s offer by Monday (Alberta time).
AWB’s July 30 merger agreement with GrainCorp calls for three days’ notice before AWB can change or withdraw its recommendation.
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“The combination of Agrium and AWB provides significant strategic and financial benefits to a wide array of stakeholders,” Agrium CEO Mike Wilson said in a release Friday.
“We are particularly excited about the future of working with AWB employees to reinvest in the business and bring a greater choice of products and services to AWB’s grower customer base.”
Agrium, which produces and markets fertilizers such as nitrogen, phosphate and potash, bought U.S. ag retail firm UAP in 2008 to become the biggest ag retailer in North America.
This expansion into Australia, which Agrium first proposed to AWB’s board last Saturday, is seen as part of the Calgary company’s broader strategy to build its retail business.
AWB’s main retail asset is Landmark Rural Services, Australia’s biggest distributor of merchandise and fertilizer, with over 400 outlets across Australia and New Zealand offering rural merchandise, ag chemicals, fertilizer, livestock, wool marketing, agronomy services and real estate services.
AWB also holds joint-venture stakes in Hi-Fert, a wholesale fertilizer distribution company already up for sale; Australian Wool Handlers; and New Zealand ag supply company RD1.
Approvals needed
AWB, which for over 60 years was Australia’s statutory grain marketing agency, still also operates in grain merchandising, pool management services, storage, handling and trade finance. It also maintains offices in Japan, Singapore, Hong Kong, India, Brazil and Switzerland.
But the Melbourne company’s market strength in Australian grain has eroded significantly since 2008, when it lost its wheat export monopoly powers in the wake of a scandal over kickback payments to secure sales to Iraq during Saddam Hussein’s regime.
A takeover of AWB, by Agrium or any other company, will still require approval from AWB’s shareholders, which had originally been expected to be held in late October.
AWB’s shareholders will also have to approve the removal of its current 10 per cent cap on shareholding.
Neither AWB nor GrainCorp had any official comment Friday.
