Calgary’s Agrium, one of the world’s top fertilizer production companies, has reached a US$2.65 billion all-cash deal to buy UAP, the biggest independent ag input distributor in Canada and the U.S.
The deal, worth US$39 per share of UAP Holdings, is already approved by both companies’ boards of directors, Agrium said in a release Monday. The tender offer is expected to start by Dec. 10 at the latest.
UAP, headquartered at Greeley, Colorado, operates about 370 distribution and storage facilities and three formulation plants, marketing chemicals, fertilizer and seed to farmers, commercial growers and regional-level dealers across North America. Its services also include crop management, biotech advisory services, custom fertilizer blending, seed treatment and custom applications of inputs.
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The company’s Canadian wing, based at Dorchester, Ont., includes warehouses in B.C., Quebec and Ontario and product lines of herbicides, fungicides, insecticides, nutrients, adjuvants, inoculants, growth regulators and other specialty products.
The deal, which is expected to be completed in early 2008, would make UAP an Agrium subsidiary and the largest North American retailer of crop inputs and services, with broader geographic coverage as the two companies combine their “complementary footprints.”
The deal is expected to create annual synergy-related savings of about $115 million by 2010, mostly through improved margins on input purchasing. Combined total retail sales would top US$5.2 billion and combined sales would reach almost US$8 billion on a company-wide basis.
Agrium said its retail business would benefit from a gain of 265 proprietary and private-label brands, as well as the effective doubling of its seed business. The two companies noted their seed sales have each grown by over 16 per cent over the past three years.
Agrium, which bought Royster-Clark, another U.S. input and seed distributor, for US$528 million last year, said the UAP deal will also expand Agrium’s retail business model to incorporate a “mid-tier service, higher-volume business.”
