The market seemed to like the deal. I drive by a number of field sites that have Viterra and Agrium signs on the same site. There must be some gains to be had with the deal.
Agrium to Acquire Viterra's Agri-Products Business from Glencore
CALGARY, ALBERTA--(Marketwire - March 20, 2012) -
ALL AMOUNTS ARE STATED IN CAD$
Agrium Inc. (TSX:AGU) (NYSE:AGU) (Agrium) announced today it has entered into a definitive agreement with Glencore International plc ("Glencore") to acquire the majority of Viterra's Agri-products business upon completion of Glencore's recently announced supported acquisition of Viterra.
Under the agreement, Agrium would acquire approximately 90 percent of Viterra's Canadian retail facilities, all of its Australian retail facilities, as well as their minority position in a nitrogen facility located in Medicine Hat, Alberta. The acquisition price from Glencore is approximately $1.15-billion plus working capital, in a back-to-back purchase and sale arrangement. Average working capital needed for this business is estimated to be approximately $0.5-billion. In 2011, Viterra's total Agri-products business generated $2.4-billion in revenue and $244-million in EBITDA according to Viterra's annual report.
"We believe our Crop Production Services Retail business can provide significant value for Canadian farmers and that it provides an opportunity for growth in a market where we currently have a limited retail presence. The transaction is an excellent fit with Agrium's stated strategy of growing across the value chain by expanding both our Retail and Wholesale operations. The acquisition is expected to be immediately accretive upon completion and will provide significant growth for our retail operations, in particular, supporting our goal of reaching $1-billion in EBITDA from our global Retail business by 2015," said Agrium President and CEO Mike Wilson.
Agrium currently operates over 1,200 retail facilities in the United States, Australia, Argentina, Canada (with 65 Canadian based facilities), Uruguay and Chile.
The conclusion of our acquisition of the majority of Viterra's Agri-products business is subject to completion of Glencore's acquisition of Viterra and to certain other terms and conditions in the definitive agreement.
Agrium Inc. is a major Retail supplier of agricultural products and services in North America, South America and Australia and a leading global Wholesale producer and marketer of all three major agricultural nutrients and the premier supplier of specialty fertilizers in North America through our Advanced Technologies business unit. Agrium's strategy is to grow across the value chain through acquisition, incremental expansion of its existing operations and through the development, commercialization and marketing of new products and international opportunities. Our strategy places particular emphasis on growth opportunities that both increase and stabilize our earnings profile in the continuing transformation of Agrium.
About Viterra's Agri-Products Business
Viterra operates a network of 258 agri-products retail locations throughout Western Canada and 17 retail locations in Australia. Retail locations offer fertilizer, crop protection products, seed and equipment to growers. Viterra also has a minority interest in a nitrogen fertilizer manufacturing plant in Medicine Hat, Alberta.
Glencore is one of the world's leading integrated commodities producer and marketer listed on the London and Hong Kong Stock Exchanges, and is active in 40 countries with more than 50,000 people employed directly and indirectly.
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