Agrium Inc. has entered into an agreement to acquire 26 retail sites in Argentina from Dupont, as well as their world-class Casilda chemical formulation facility. Agrium says annual revenues of the retail business are around $57 million, and that the acquisition is expected to be accretive in the first year and at an attractive multiple for Agrium.
Agrium said the retail network serves about 35 percent of the Argentine agriculture market, with heavy focus on crop protection products. The Casilda plant provides in-market advantages and opportunities to further grow Loveland products in Argentina and other South American countries.
The deal is expected to close by July 1. Details as to price were not available, and Agrium said the transaction is not material to either company.
Agrium already owns some 30 retail centers in Argentina, along with its 50 percent stake in nitrogen producer Profertil. It also owns a small number of outlets in Uruguay and Chile.
In other acquisition news last week, Agrium detailed for investors its plan to double retail EBITDA to $1 billion from the current $500 million by 2014. To do so, Agrium says it can use organic growth (30 percent), internal strategic initiatives (20 percent), and domestic and international acquisitions (50 percent).
Agrium sees as potential acquisitions some 376 locations owned by 115 companies, with combined revenues of $2.5 billion in the U.S. and Canada.
In the U.S., Agrium is eyeing 104 companies with 311 locations and revenues of $2.27 billion. Of these, Agrium says it already has a relationship with 25-30, with potential revenues of $500 million.
The largest concentration of retail units being assessed are in the West, with 31 companies, 120 locations, and $772 million in revenues. Next is the Eastern Corn Belt (Ohio, Michigan, Indiana, Kentucky, and part of Tennessee) with 33 companies, 84 locations, and $682 million in revenues. The South comes in third, with nine companies, 44 locations, and $399 million in revenues, followed by the Central Corn Belt (Colorado, Kansas, Missouri, Illinois, Wisconsin, and eastern Iowa), with 12 companies, 28 locations, and $156 million in revenues. This is followed by the Western Corn Belt (Nebraska, western Iowa, North and South Dakota, and Minnesota) with 14 companies, 21 locations, and $134 million in revenues. Agrium sees five companies as potential acquisitions in the East, with 14 locations and $124 million in revenues.
In Western Canada, Agrium sees opportunities with 11 companies, 65 locations, and revenues of $240 million. Agrium said there are a lot of independents in this market.
| Region |
Companies |
Locations |
Revenues $M |
| West |
31 |
120 |
$722 |
| E. Corn Belt |
33 |
84 |
682 |
| South |
9 |
44 |
399 |
| C. Corn Belt |
12 |
28 |
156 |
| W. Corn Belt |
14 |
21 |
134 |
| East |
5 |
14 |
124 |
| Total U.S. |
104 |
311 |
$2,267 |
| W. Canada |
11 |
65 |
$240 |
| Total |
115 |
376 |
$2,507 |
In 2009/10, Agrium acquired 71 new retail centers in the U.S. and Canada, with combined revenues of about $450 million (GM, Jan. 18, 2010, Nov. 30, 2009). This included 33 sites in the U.S. with $210 million in revenues, and 38 sites in Canada with $237 million in revenues.
In other news, Agrium told attendees at its June 15 Investors Day that it is in the final stages of extending natural gas contracts at the Profertil plant in Argentina. Two contracts that were due to run out next year are being extended to the end of 2017. “That will be at index pricing well below NYMEX, and it will give us a 2017 end date on all of our major contracts,” said Ron Wilkinson, Agrium senior vice president and Wholesale president. “So, that’s a big step forward in terms of cementing very strong earnings for Profertil going forward.”
Agrium also acknowledged the impact of shale gas in North America and its impact on keeping North American natural gas prices low. It noted that shale gas discoveries have been made in Poland, though they may be ten years out from full development.
“We are paying quite a bit of attention to Poland in particular because it is a very, very big agricultural market,” said Kevin Helash, Agrium vice president, marketing and distribution. “And the production assets in Poland are reportedly up for sale.”
Agrium said it received its first dividend check – for $14 million – from its investment in the new MOPCO nitrogen project in Egypt in May. It noted that the facility is expanding production and that some 500,000 mt of that product could move into Western Europe via Agrium Europe, formerly known as Common Market Fertilizers, which was another fairly recent acquisition. Agrium noted that it also has a nice little business in Bulgaria, and that the Egyptian tonnage will allow it to also expand that footprint.
Agrium is not worried about finding phosphate rock for its Redwater, Alberta, plant as it says the phos rock market is long and will be for some time. The company will need 1 million mt/y of imported rock to replace product from its Kapuskasing, Ont., mine, which is expected to stop production in first quarter 2013 through mid-2014. Possible rock suppliers include Morocco’s OCP, as well as the new Bayovar project in Peru. Agrium said that while Mosaic Co. has invested in that project, some two-thirds of the offtake is still available.
