By Lisa Kerner
Charlotte, N.C., Dec. 3 - Agrium Inc. agreed to acquire UAP Holding Corp. in a deal valued at $2.65 billion, including debt.
A wholly owned subsidiary of Agrium will begin a tender offer before Dec. 10 to purchase all of the outstanding common stock of UAP for $39 cash per share, according to a company news release.
Both companies' boards of directors unanimously approved the agreement, with the UAP board of directors recommending its shareholders accept the tender offer. A $44 million termination fee is included in the deal, a form 8-K filing stated.
UAP will become a wholly owned subsidiary of Agrium once the transaction closes in early 2008.
The merger is expected to create "the largest North American retailer of crop inputs and services, with broader geographic coverage," the filing stated.
Annual synergies of some $115 million are expected in 2010 and beyond largely through enhanced purchasing efficiencies.
Agrium said it has committed bridge and term loan financing to fund the acquisition and plans to arrange financing of $1.25 billion in equity. Public and bank term debt is expected to replace the bridge loan, the release stated.
"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," Agrium president and chief executive officer Mike Wilson said in the release.
"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," Wilson added.
Agrium is being advised by RBC Capital Markets; Blake, Cassels & Graydon LLP; and Paul, Weiss, Rifkind, Wharton & Garrison LLP. UAP is being advised by J.P. Morgan Securities Inc., which rendered a fairness opinion, as well as Wachtell, Lipton, Rosen & Katz.
UAP Holding, located in Greeley, Colo., is the holding company of UAP Inc., an independent distributor of agricultural and non-crop products in the United States and Canada.
Agrium is a retail supplier of agricultural products and services in North America and South America and a producer of agricultural nutrients and industrial products. The company is based in Calgary, Alta.
| Acquirer: | Agrium Inc.
|
| Target: | UAP Holding Corp.
|
| Announcement date: | Dec. 2
|
| Transaction total: | $2.65 billion
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| Price per share: | $39.00
|
| Termination fee: | $44 million
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| Expected closing: | Early 2008
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| Stock price of target: | Nasdaq: UAPH: $29.91 on Nov. 30
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