AWB board recommends Agrium deal

Calgary-Agrium Inc. and AWB Ltd. said Aug. 24 that the AWB board has recommended Agrium’s proposed acquisition (GM Aug. 23, p. 1) to AWB shareholders. Under the terms of the definitive agreement for Agrium to acquire AWB, AWB will commence the scheme of arrangement process pursuant to which Agrium will purchase all of the outstanding shares and performance rights of AWB for A$1.50 per share in cash for A$1.238 billion. “We are pleased with the AWB board’s decision to support our offer and expect the transaction will bring immediate value to both AWB and Agrium stakeholders. We believe there are significant opportunities to provide efficiencies across the value chain, including offering new products and services, for the benefit of Australian growers,” said Agrium’s President and CEO Mike Wilson. “We are excited about the opportunity to work with AWB employees to build on the solid relationship that AWB has already developed with customers.” He expects the acquisition will be significantly accretive to Agrium’s earnings in the first year and will generate synergies of A$40-million or more on an annual basis, with limited synergies realized in the first year, the majority in 2012, and the full amount obtained in 2013 and thereafter. “This is expected to be achieved primarily through improved margins within the Landmark retail division, largely through enhanced purchasing efficiencies, expansion in product offerings and other improvements, as well as some reduction in expenses,” added Wilson. The AWB board recommendation is subject to no superior proposal being received by AWB and confirmation from an independent expert that the scheme is in the best interests of shareholders. The agreement with Agrium permits AWB to pay a dividend of up to A$0.20 cents per share, fully franked, subject to obtaining a favorable ATO ruling, which will be funded by a loan from Agrium. The price payable for the purchase of the AWB shares would be reduced by the cash amount of any dividend paid.