Monday, August 16, 2010

Wheat Wars: "Agrium Unveils Offer for Australian Wheat Exporter AWB" (AGU; AWB.asx)

Wheat is headed south again, down 8.25 cents at $7.26 in Chicago.
From the Wall Street Journal:
In an unexpected move, Canada's Agrium Inc. on Monday unveiled what could be a compelling offer for Australian wheat exporter AWB Ltd., which is working through a merger proposal with rival GrainCorp Ltd.
According to the conditional all-cash offer that values AWB at 1.24 billion Australian dollars (US$1.1 billion), Agrium proposes to pay A$1.50 for each AWB share, 24% more than the value Monday of the share-based merger with GrainCorp.

Agrium said its proposal represents a 57% premium to AWB's closing price of A$0.955 on July 29, just before the merger plan with Graincorp was announced. Under that plan, AWB shareholders were to get one GrainCorp share for every 5.75 shares held. At Monday's GrainCorp closing price of A$6.53 per share, that works out to around A$1.14 for every AWB share.

AWB shares surged 30%, or 32.5 cents, following the Agrium bid to A$1.42, the former wheat export monopoly's highest close since February 2009.

If successful, this could be the second case of a major Australian agricultural concern being taken over by a Canadian company in less than a year. Late last year, South Australia-based ABB Grain Ltd. was taken over by Canada's Viterra Inc. for about A$1.65 billion.

Calgary-based fertilizer company Agrium said it sees significant potential to enhance its product and service offerings to Australian and New Zealand growers. Through the 400 outlets in AWB's Landmark national rural merchandise and service network, Agrium is hoping to market its international fertilizer and crop protection capabilities, President and Chief Executive Mike Wilson said....MORE

From Deal Journal:
(click to enlarge)