Agrium Inc. has entered into a definitive agreement with Glencore International plc to acquire the majority of Viterra’s Agri-products business upon completion of Glencore’s recently announced supported acquisition of Viterra.
Under the agreement, Agrium would acquire approximately 90% of Viterra’s Canadian retail facilities, all of its Australian retail facilities, as well as their minority position in a nitrogen facility located in Medicine Hat, Alberta. The acquisition price from Glencore is approximately $1.15 billion plus working capital, in a back-to-back purchase and sale arrangement. Average working capital needed for this business is estimated to be approximately $0.5 billion. In 2011, Viterra’s total Agri-products business generated $2.4 billion in revenue and $244 million in EBITDA according to Viterra’s annual report.
“We believe our Crop Production Services Retail business can provide significant value for Canadian farmers and that it provides an opportunity for growth in a market where we currently have a limited retail presence,” said Agrium President and CEO Mike Wilson. “The transaction is an excellent fit with Agrium’s stated strategy of growing across the value chain by expanding both our Retail and Wholesale operations. The acquisition is expected to be immediately accretive upon completion and will provide significant growth for our retail operations, in particular, supporting our goal of reaching $1 billion in EBITDA from our global Retail business by 2015.”
Agrium currently operates more than 1,200 retail facilities in the U.S., Australia, Argentina, Canada (with 65 Canadian-based facilities), Uruguay and Chile.
The conclusion of Agrium’s acquisition of the majority of Viterra’s Agri-products business is subject to completion of Glencore’s acquisition of Viterra and to certain other terms and conditions in the definitive agreement.