This time around, Saskatchewan Wheat Pool Inc.’s offer for Agricore United (AU), pleases everybody. SaskPool’s latest revised offer, valued at C$1.8 billion, pleases AU and also allows James Richardson International Ltd., AU’s other suitor, to buy certain AU assets. As a result, JRI is onboard with the deal. In addition, Cargill Inc., as earlier reported, will also pick up some assets (GM April 2, p. 1).
“The revised SaskPool offer represents an increase in the cash offered to AU shareholders under the previous JRI transaction and a premium of almost 150 percent over the value of the AU shares prior to the initial SaskPool bid on Nov. 7, 2006,” said Wayne Drul, chair of the AU board of directors. “This revised all-cash offer from SaskPool also provides certainty of value and reduced execution risk.”
SaskPool will enhance and extend its common share offer for all of Agricore’s outstanding shares, providing an all-cash offer of $20.50 for each AU limited voting common share. SaskPool continues to offer $24.00 in cash, plus accrued and unpaid dividends for each Agricore Series A convertible preferred share. The offers have been extended until 5:00 p.m. (Toronto time) on May 28, 2007, unless further extended or withdrawn.
SaskPool says the deal will make it the largest Canadian agri-business, with estimated sales of approximately $4 billion annually. It will also create $70 million in annual synergies. The company will hold a leading position in grain handling and marketing, agri-products retailing, value-added processing, and seed development. In addition to its 100 percent ownership in Can-Oat Milling, SaskPool will own 100 percent of Western Co-operative Fertilizer Limited (WCFL), a supplier of fertilizer products with a 34 percent interest in fertilizer manufacturer Canadian Fertilizers Ltd., and will also have a substantial presence in feed manufacturing. After the sale of assets to JRI, SaskPool will have 276 agri-product facilities throughout Western Canada.
SaskPool will sell JRI certain AU grain facilities and agri-products retail operations throughout Manitoba, Alberta, and Saskatchewan, representing approximately $40 million in annualized EBITDA. JRI has agreed to pay SaskPool $255 million in cash, plus amounts related to inventory and other closing adjustments estimated to be approximately $60 million. JRI will be buying 24 facilities, 21 of which sell agri-products, i.e. crop inputs.
| Outlets to JRI | Grain | Agri-Products | Grain & Agri-Prod |
| Alberta | Stirling | Sprucefield | Olds |
| Legacy Junction | Magrath | Dunmore | |
| Bigstone | Rycroft | ||
| Spirit River | |||
| Wheatland | |||
| Manitoba | Minnedosa | Grand Plains | Dauphin |
| Dundonald | |||
| Killarney | |||
| Shoal Lake | |||
| Starbuck | |||
| Swan River | |||
| Saskatchewan | Melfort | Dixon | |
| Saskatoon | Reed Lake | ||
| Simpson | Tribune |
JRI will retain all employees at the acquired locations and will be responsible for all associated regulatory approvals (including the Competition Act) required in connection with the sale. Closing of the JRI sale will occur following the SaskPool acquisition of 100 percent of the outstanding limited voting common shares of AU.
SaskPool has agreed to enter into a ten-year terminal handling agreement with JRI, under which the Pool will handle up to 750,000 mt of JRI-originated commodities annually through the Cascadia port terminal in Vancouver. JRI will pay SaskPool a handling fee for each mt handled.