Agriliance LLC owners Land O’Lakes Inc. and CHS Inc. announced on June 21 that they are repositioning two business segments of the Agriliance agronomy joint venture. CHS is acquiring the crop nutrients wholesale distribution business, and LOL is acquiring the crop protection products business. Agriliance will continue to operate its existing retail agronomy business as a LOL/CHS joint venture. George Thornton, Agriliance’s current CEO, has announced that he will be retiring in connection with the repositioning efforts.
Terms of the transaction, expected to be completed in September 2007, will not be disclosed until details are finalized. The announcement comes after weeks of speculation within the industry about Agriliance’s future (GM June 11, p. 1), including rumors that various company assets were on the market. Industry sources had talked of several companies expressing an interest, with reports that some had toured facilities in recent weeks.
Other sources had reasoned, however, that improved financial results for Agriliance would result in its jv owners keeping the company in the fold. After an off year in 2006, first-quarter net earnings for Agriliance were up $21.2 million, to $10.4 million versus the year-ago loss of $10.8 million. Net sales were up over $100 million, to $729.1 million versus the year-ago $625.8 million.
LOL President and CEO Chris Policinski and CHS President and CEO John Johnson said repositioning the businesses is the most appropriate strategic decision. “This repositioning is consistent with our objective of maintaining the most effective farmer-owned presence possible in the crop inputs industry,” the two said in a joint statement. “By aligning each business segment with the core competencies and strengths of each parent company, we can intensify our focus in each of these key businesses, reduce costs and even more effectively supply valuable crop inputs to members and customers.”
The Agriliance crop nutrients business, which will be owned by CHS, supplies retailers and growers with primary crop nutrients through a supply network that includes a deep-water port at Galveston, Texas, facilities at Memphis, Tenn., and strategically located crop nutrients terminals. The companies said the crop nutrients business will benefit from CHS’s capabilities in logistics, distribution, risk management, and global trading.
The Agriliance crop protection products operation will become an operating unit of LOL, and includes the AgriSolutions?äó line of more than 200 adjuvants, herbicides, insecticides, fungicides, defoliants, and seed and grain protectants. These products are manufactured at plants in Hampton, Iowa, St. Joseph, Mo., and Blytheville, Ark. The crop protection products operation also includes a technology and education system.
The crop protection products business will be closely aligned with LOL’s Seed division. The two businesses will leverage combined technical and marketing expertise in the implementation of a collaborative go-to-market strategy, the company said. Anticipated changes include expanded joint promotions, marketing and brand building efforts, coordinated service offerings, and new efficiencies gained through shared customer service and distribution activities.
The synergies are also intended to enhance LOL’s AgriSolutionsTM crop protection product, Origin® micronutrient, and Croplan Genetics® seed brands.