Saskatoon, Saskatchewan
May 9, 2007
A winning solution for Canadian
agriculture
Saskatchewan Wheat Pool Inc.
(the "Pool") is pleased to announce that it has revised its
offer for Agricore
United (“Agricore”) and reached an agreement with Agricore,
which will allow the Pool to create the leading Canadian
agri-business positioned to serve farmers and destination
customers around the world. The Pool has also agreed to sell
select Agricore assets to James Richardson International Limited
(“JRI”) under an agreement in which JRI is supportive of the
Pool’s purchase of Agricore. The Agricore Board of Directors
supports the transaction and will be recommending that
shareholders accept the Pool’s offer.
The Pool 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 Agricore limited voting common share. The Pool
continues to offer $24.00 in cash, plus accrued and unpaid
dividends for each Agricore Series A convertible preferred
share. The offers, as outlined in the November 24, 2006
circular, as amended, have been extended until 5:00 p.m.
(Toronto time) on May 28, 2007, unless further extended or
withdrawn.
Agricore’s Board of Directors has advised the Pool and JRI that
the Pool’s offer is a “Superior Proposal” pursuant to its April
19 amended acquisition agreement with JRI. The acquisition
agreement between JRI and Agricore has been terminated.
President and Chief Executive Officer, Mayo Schmidt said, “We
have developed a comprehensive and winning solution for Prairie
agriculture and for our respective shareholders. We can now move
forward with momentum. We are pleased to have the support of
Agricore’s Board of Directors and are excited about the future
opportunities that will be available to drive additional value.
Together, our teams have the skills and resources to make this
transaction a success and we look forward to building a great
Canadian agri-business that we can all be proud of.”
Agricore shareholders will receive a revised Notice of Extension
and Variation from the Pool in the coming days. Shareholders are
advised to review the information carefully, and contact
Kingsdale Shareholder Services Inc.
immediately, toll-free at 1-866-301-3454 for information about
how to tender their Agricore shares to the Pool's offers or
withdraw shares they have tendered to the JRI offer, which is
being terminated. Agricore shareholders are urged to tender
their shares to the Pool’s offer by 5:00 p.m. (Toronto time) on
May 28, 2007, unless that deadline is further extended or
withdrawn.
Through this combination, the Pool will become a strong global
competitor and the largest Canadian agri-business with estimated
sales of approximately $4 billion annually. 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% ownership in Can-Oat
Milling, the Pool will own 100% of Western Co-operative
Fertilizer Limited (“WCFL”), a supplier of quality fertilizer
products with a 34% interest in fertilizer manufacturer,
Canadian Fertilizers Limited, and will also have a substantial
presence in feed manufacturing. This acquisition allows the Pool
to strengthen its focus on value-added processing, supported by
an efficient and integrated grain and agri-products
infrastructure.
The Pool has entered into a definitive asset purchase agreement
with JRI under which JRI will purchase certain Agricore grain
facilities and agri-products retail operations throughout
Manitoba, Alberta and Saskatchewan (“JRI Sale”), representing
approximately $40 million in annualized EBITDA. In consideration
for the asset sale, JRI has agreed to pay the Pool $255 million
in cash, plus amounts related to inventory and other closing
adjustments estimated to be approximately $60 million. This
agreement is in addition to the Pool’s previously announced
transaction with Cargill Limited (“Cargill”) to purchase
Cargill’s partnership interest in the Cascadia port facility and
to sell the Pool’s Vancouver terminal and certain Agricore
country assets upon the
successful completion of the Agricore acquisition. The proceeds
from the sale of fixed assets under the Cargill and JRI
agreements will reduce certain tax pools and non-capital loss
carry forwards. Based on current projections, management does
not expect the Pool to be fully taxable until 2010.
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
JRI Sale.
Closing of the JRI Sale will occur following the Pool
acquisition of 100% of the outstanding limited voting common
shares of Agricore.
The Pool has agreed to enter into a ten-year terminal handling
agreement with JRI under which the Pool will handle up to
750,000 tonnes of JRI-originated commodities annually through
the Cascadia port terminal in Vancouver. JRI will pay the Pool a
handling fee for each tonne handled.
Schmidt said, “Today is an important event for Canadian
agriculture. We compete on a daily basis, but we are three
distinct companies with an unwavering commitment to this
industry. We have embraced a shared vision that we believe will
improve the business of Canadian agriculture. It is an important
day for farmers, employees, shareholders and the communities in
which we operate. We are elevating excellence and building a
future for agriculture.”
Under the Pool-Agricore combination Pool shareholders will
benefit from:
- Revised synergies of
approximately $70 million annually;
- Superior assets supported
by an integrated pipeline from field to destination
customer. After the JRI Sale, the Pool will operate 1.87
million metric tonnes of storage capacity on the Prairies of
which 84% will be 50 and 100-car loading capacity;
- Well-positioned export
capabilities including 8.0 million metric tonnes of
throughput capacity in Vancouver, an important gateway to
Asian Pacific demand, in addition to export capacity at
Thunder Bay, Ontario, and Prince Rupert, B.C.;
- Following the JRI Sale,
the Pool will have 276 agri-product facilities throughout
Western Canada. The Pool, through its retail network, will
offer a full line of farm supplies to farm customers. In
addition to the value created through 100% ownership of
WCFL, farmers will benefit from combining the Pool and
Agricore's highly innovative and complementary seed research
and development programs; and
- Increased agri-products
sales opportunities for a variety of custom seed
solutions including Proven Seed® and the Pool’s top
performing proprietary varieties.
“We believe that by combining
these assets together with our collective years of expertise in
serving agriculture, we will be able to lower the cost of moving
grains and oilseeds to market and create efficiencies for all
stakeholders,” said Schmidt. “We will be a leading employer from
Thunder Bay to Vancouver, with a foundation to expand our
business and increase our collective influence on the global
stage. Optimism in agriculture is high with demand for Canadian
commodities being fueled by numerous sources, including
alternative energy production, consumer product choice and
significant demand from Asian-Pacific countries. This is a
transformational transaction in an industry poised for new and
exciting opportunities. We are acting now to position the
company for the future.”
The Pool has entered into a commitment letter with The
Toronto-Dominion Bank (“TD”) and GE Corporate Lending, Canada
(“GE”) pursuant to which TD and GE have fully committed to make
available a credit facility to be used to finance, in part, the
Pool’s revised offer for Agricore’s limited voting common shares
and to refinance existing indebtedness of Agricore. Proceeds
from the JRI Sale will be applied against the credit facility.
Saskatchewan Wheat Pool Inc. is a publicly traded
agribusiness headquartered in Regina, Saskatchewan. Anchored by
a Prairie-wide grain handling and agri-products marketing
network, the Pool channels Prairie production to end-use markets
in North America and around the world.
These operations are complemented by value-added businesses and
strategic alliances, which allow the Pool to leverage its
pivotal position between Prairie farmers and destination
customers. The Pool's common shares are listed on the Toronto
Stock Exchange under the symbol SWP and its subscription
receipts under the symbols SWP.R, SWP.N and SWP.O.
RELATED RELEASE:
Agricore United announces revised all-cash
offer of C$20.50 per share from Saskatchewan Wheat Pool
Other news
from Agricore
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