Agrium Inc. said May 7 that it has successfully completed its $2.65 billion acquisition of UAP Holding Corp. at a price of $39.00 per share in cash. Pursuant to the merger agreement, dated Dec. 2, 2007 (GM Dec. 10, 2007, p. 1), between Agrium, UAP, and Utah Acquisition Co., an indirect wholly-owned subsidiary of Agrium, Utah Acquisition has been merged with and into UAP, with UAP continuing as the surviving corporation and an indirect wholly-owned subsidiary of Agrium.
The merger of UAP with Utah Acquisition follows the successful completion of the tender offer by Agrium U.S. Inc., an indirect wholly-owned subsidiary of Agrium, for all of the issued and outstanding shares of common stock of UAP at a price of $39.00 per share in cash. The tender offer expired at 12:00 midnight, New York City time, on Friday, May 2, 2008.
As a result of the merger, each share of common stock of UAP issued and outstanding immediately prior to the effective time of the merger (other than any shares in respect of which appraisal rights are validly exercised under Delaware law and any shares owned by UAP, Agrium, or any of their wholly-owned subsidiaries) has been converted into the right to receive the same $39.00 in cash per share, without interest and less any required withholding taxes, that was paid in the tender offer.
With the completion of the merger, UAP’s shares of common stock will cease to be traded on the NASDAQ Global Select Market.
In the meantime, the U.S. Federal Trade Commission on May 5 filed a consent order saying that Agrium is required to sell five UAP farm stores in Michigan and two Agrium stores in Maryland and Virginia within 180 days of Agrium’s acquisition of UAP Holdings.
“Agrium and UAP are direct competitors in the six overlapping markets defined by the Commission,” said Jeffrey Schmidt, director of the FTC’s Bureau of Competition. “The consent order announced today will help preserve competition in the market for the sale of fertilizer in these regions after this deal is completed.”
FTC noted that Agrium is the largest retail farm store operator in the U.S., with 433 locations in 31 states operating under the Crop Production Services and Western Farm Service brands. UAP is the second largest farm store operator in the U.S., operating 370 stores nationwide.
Both Agrium and UAP own competing farm stores in the relevant geographic area, which includes six markets ?Çô three in the central “thumb” of Michigan, two in east/central Michigan, and one on the eastern shore of Maryland. Specifically, the acquisition would impact stores in or near the towns of Croswell, Richmond, Imlay City, Vestaburg, and Standish, Michigan; and Pocomoke City/Girdletree, Maryland.
The order requires the divestiture of Agrium’s store in Keller, Va., and that it be sold as a unit with Agrium’s Maryland store, because Agrium’s Keller store supplies Agrium’s store in the Pocomoke/Girdletree, Maryland, region with essential custom-blended fertilizer.
The order defines the scope of the assets to be sold and requires Agrium, for up to a year, to provide the necessary transition services to the buyer of the stores to allow for a smooth transition to the acquirer. The order also provides mechanisms to ensure that each employee at the UAP stores to be sold can be hired by the acquirer, requires that the companies keep private most confidential information related to the divested UAP stores, and requires the companies to provide the Commission with advance notice in writing if they intend to buy any assets in the relevant geographic area that sell agricultural products. Finally, the order provides for the appointment of a divestiture trustee in the event the respondents fail to divest the assets as required under the order.
The order contains an Order to Hold Separate and Maintain Assets that requires the companies to maintain the assets to be divested pending their sale and provides for the appointment of an interim monitor to oversee the assets to be sold in the relevant markets. The Order to Hold Separate describes the interim monitor’s broad oversight of the assets and reporting requirements to the Commission. It also requires the companies to appoint a manager who will run the assets independently and will be given financial incentives to ensure their success.
The Commission vote to accept the complaint, proposed consent order, and Order to Hold Separate and Maintain Assets was 4-0. The FTC will publish an announcement regarding the agreement in the Federal Register. The agreement will be subject to public comment for 30 days, beginning today and continuing through June 4, 2008, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.
