Calgary, Alberta, Canada
December 3, 2007
All amounts are stated in U.S.$
Agrium Inc. (TSX and NYSE:
AGU) and UAP Holding Corp.
(NASDAQ: UAPH) announced today that they have entered into a
definitive agreement for Agrium to acquire UAP. Under the terms
of the agreement, a wholly-owned subsidiary of Agrium will
commence a tender offer to purchase all of the outstanding
common stock of UAP for $39 per share in cash for an aggregate
transaction value of approximately $2.65-billion, including an
estimated $487-million of assumed debt. The all cash purchase
price represents a 27 percent premium over the volume
weighted-average trading price for UAP shares on the NASDAQ for
the 20 trading days ended November 30, 2007 and a premium of 30
percent over the closing price of $29.91 per share on that date.
The boards of directors of both companies have unanimously
approved the agreement, and the UAP board of directors has
unanimously recommended that the UAP shareholders accept the
tender offer.
“The addition of UAP’s business to our own Retail operations is
an excellent strategic fit for Agrium and a significant step in
our strategy of continuing to grow and transform the Company.
The acquisition will significantly expand our geographic base
and our product diversity, and will offer an opportunity to
leverage strengths of both companies,” said Mike Wilson,
President and CEO of Agrium. “We believe the transaction will
enable Agrium to capitalize on the strong outlook for
agriculture markets and will allow us to deliver value to both
our shareholders and our customers. It increases the scale and
size of our business, further enhances stability of our earnings
profile and strengthens Agrium’s ability to serve and grow its
customer base. A key factor to our success will be drawing from
the extensive experience of employees from both organizations.”
“We anticipate we will be able to generate annual synergies of
approximately $115-million by 2010, with a majority of this
captured in 2009. We expect that these synergies will be
achieved primarily by improved margins on all three crop input
product groupings, largely through enhanced purchasing
efficiencies. This acquisition is expected to be slightly
accretive on an earnings per share basis in the first year and
significantly accretive thereafter. Agrium has committed bridge
and term loan financing in place to fund the acquisition and our
plan is to arrange financing of $1.25-billion in equity, with
the balance in public and bank term debt to replace the bridge
loan,” said Mr. Wilson.
“This transaction represents an extraordinary opportunity for
our shareholders, customers, and employees,” said Kenny Cordell,
CEO and President of UAP. “Agrium is well respected in the
industry and we believe that the combination of the two
organizations will allow for an improved product offering and
new services and technologies to be delivered to a broader range
of customers.”
Agrium noted the following key benefits of the transaction:
- Creates the largest North
American retailer of crop inputs and services, with broader
geographic coverage as a result of combining the
complementary footprints of Agrium and UAP;
- Expected annual synergies
of approximately $115-million, with approximately
$20-million in 2008, approximately $80-million in 2009 and
approximately $115-million in 2010 and beyond;
- Combined Retail EBITDA of
$417-million for the last twelve months excluding synergies,
and approximately $532-million in Retail EBITDA on a
combined basis for the last twelve months including the
approximately $115-million in expected annual synergies;
- Supports Agrium’s strategy
of investing through the value chain, diversifying
geographically and expanding Agrium’s stable earnings base
profile;
- Expands Agrium’s Retail
business model to incorporate a mid-tier service,
higher-volume business;
- Combined total Retail
sales of over $5.2-billion and combined sales of almost
$8-billion on a company wide basis on a last twelve month
basis;
- Provides Agrium’s Retail
business with 265 proprietary and private label brands and
more than doubles Agrium’s seed business. Seed sales have
grown by over 16 percent per year for both Agrium and UAP
over the past three years;
- Provides a larger,
stronger platform to support Agrium’s future growth.
The tender offer is expected to
commence no later than December 10, 2007 and completion of the
tender offer is subject to customary conditions, including that
shares representing at least a majority of the UAP common stock
on a fully diluted basis are validly tendered into the offer,
and that customary regulatory approvals are obtained. Following
completion of the tender offer, UAP will engage in a second-step
merger with the subsidiary of Agrium, pursuant to which each
share of outstanding UAP common stock not tendered in the tender
offer will be converted into the right to receive $39 in cash.
Upon completion of the merger, UAP will become a wholly-owned
subsidiary of Agrium. The parties expect to complete the
transaction in early 2008.
Agrium has engaged RBC Capital Markets as financial advisor and
Blake, Cassels & Graydon LLP and Paul, Weiss, Rifkind, Wharton &
Garrison LLP in connection with the transaction. UAP has engaged
J.P. Morgan Securities Inc. as financial advisor which provided
a fairness opinion on the transaction, and Wachtell, Lipton,
Rosen & Katz as legal counsel in connection with the
transaction.
UAP Holding Corp. is the holding company of UAP Inc., the
largest independent distributor of agricultural and non-crop
products in the United States and Canada. UAP Inc. markets a
comprehensive line of products, including chemicals, fertilizer,
and seed to farmers, commercial growers, and regional dealers.
UAP also provides a broad array of value-added services,
including crop management, biotechnology advisory services,
custom fertilizer blending, seed treatment, inventory
management, and custom applications of crop inputs. UAP Products
maintains a comprehensive network of approximately 370
distribution and storage facilities and three formulation
plants, strategically located in major crop-producing areas
throughout the United States and Canada.
Agrium Inc. is a major retail supplier of agricultural products
and services in both North and South America and a leading
global producer and marketer of agricultural nutrients and
industrial products. Agrium produces and markets three primary
groups of nutrients: nitrogen, phosphate and potash as well as
controlled release fertilizers and micronutrients. Agrium’s
strategy is to grow through incremental expansion of its
existing operations and acquisitions as well as the development,
commercialization and marketing of new products and
international opportunities. |
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