CALGARY — Agrium Inc. says it has entered into a definitive agreement to acquire Australian grain marketer AWB Ltd. for $1.1 billion, pushing out a competing bidder.
The Calgary-based farm products firm (TSX:AGU) said AWB’s board has deemed its bid superior to an earlier takeover proposal from Australian grain handler GrainCorp Ltd. That offer was reportedly worth around $829 million.
“The combination of Agrium and AWB provides significant strategic and financial benefits to a wide array of stakeholders. We are particularly excited about the future of working with AWB employees to reinvest in the business and bring a greater choice of products and services to AWB’s (growing)customer base,” stated Agrium president and CEO Mike Wilson.
AWB is required to provide three days’ notice to GrainCorp before withdrawing its recommendation that shareholders approve that transaction. The waiting period expires Monday, and Agrium said it expects AWB to recommend its bid at that time.
Agrium announced Monday that it had launched an unsolicited bid for AWB in the hopes of establishing a retail presence Down Under. The company said it hoped to avoid a drawn-out battle like the one it found itself mired in when it bid for Illinois-based fertilizer producer CF Industries Holdings Inc. last year.
CF ultimately won its own hostile pursuit of a U.S. rival in March.
Agrium will pay A$1.50 per share for AWB, which amounts to approximately C$1.1 billion.
Agrium won’t be the first Canadian agribusiness to enter the Australian market. Last year Canada’s biggest grain handler, Viterra Inc. (TSX:VT), bought ABB Grain for $1.4 billion.
Shares in Agrium, which reported the agreement after markets closed, lost 90 cents to $71.01 Thursday on the Toronto Stock Exchange.