UAP Holding Corp. said Jan. 4 that its subsidiary, UAP Distribution Inc., has entered into a definitive agreement with AGSCO Inc. to acquire certain assets of its retail distribution business and its affiliated services businesses, Ag Depot Inc.
AGSCO is a leading regional distributor of chemicals, with a growing seed and fertilizer business. AGSCO has multiple retail locations in Minnesota, Montana, North Dakota, and South Dakota, and approximately 37 sales people. UAP said CropLife Magazine, in its 23rd Annual CropLife 100 listing, recently ranked AGSCO as the 20th largest U.S. company as measured by retail sales. Ag Depot is a warehouse business for agricultural chemical suppliers.
“The acquisition of AGSCO Inc. solidifies UAP’s presence in this key regional market and demonstrates UAP’s commitment to expanding its retail distribution business,” said Kenny Cordell, UAP Holding Corp.’s chairman, president, and CEO. “We continue to march forward on our acquisition strategy that should grow revenue, strengthen margins, expand the opportunity for our proprietary products and fill-in gaps in our nationwide footprint.”
AGSCO will help fill in one of those gaps, said Cordell in a teleconference Thursday. It will give UAP the chance to sell to new markets with no overlap.
Cordell said UAP expects to make several acquisitions by the end of the year. He said that in retail, there is a rich pipeline of opportunities to evaluate. UAP hopes to add assets that can provide $100-$200 million of annual retail sales.
UAP noted that already this fiscal year, it announced the acquisition of UAP Timberland assets in the first quarter and Terral AgriServices in the second. The company said it has also picked off some small retailers along the way, without making formal announcements. UAP related last week that it bought two retail distribution locations from two independent retail distributors just after the end of the third quarter. Additional details were not immediately available at press time.
Despite a difficult year in 2006, Cordell said the company has increased market share in all three major products ?Çô fertilizer, crop protection, and seeds (see UAP earnings inside for more details).
Terms of the AGSCO deal were not immediately disclosed. The company said the agreement is subject to customary closing conditions. The acquisition is expected to close in UAP’s fourth fiscal quarter, which will end in February.