AWB warms to Agrium offer
Saturday, August 21st, 2010 Uncategorized.
AWB provision warms to Agrium offer
THE board of AWB is set to commend that shareholders accept a $1.2 billion takeover offer from Agrium.
The fare’s recommendation hinges on its belief that competitor suitor GrainCorp is unlikely to develop a superior offer over the weekend.
Less than a week hind flagging its interest in the local wheat exporter, the Canadian agricultural huge. has signed an agreement to acquire AWB for $1.50 a receive.
The cash bid trumps GrainCorp’s own scrip-based offer, which had valued AWB shares at about 95c just prior to the merger annunciation late last month.
AWB has yet to recommend Agrium’s bid — the terms of its agreement with GrainCorp require it to wait three days prior to it can change or withdraw its previous endorsement of the merger — limit the board is understood to prefer the Canadian proposal.
Agrium issued a mention to its investors yesterday that AWB had advised the company’s scheme was superior to the proposed merger with GrainCorp, which was developed to steel the two companies’ global competitiveness.
GrainCorp chairman Don Taylor and lately appointed managing director Alison Watkins are expected to discuss the contingency of a counter-bid with the company’s advisers over the weekend.
A speaker for GrainCorp declined to comment yesterday, but a source close to the arrange said there was "next to no chance" of the meeting of friends revising its offer. "It’s a big ask to be of use from a share swap to a $1.50 cash offer," the fountain-head. well said.
AWB is expected to make an announcement on the takeover on Tuesday.
Its investors, including local grain growers, will be keen to learn whether the progressive growth is a catalyst for competing offers from other international agribusiness players, like as Viterra, which has been rumoured to be closely watching the group.
AWB, which continues to deal with residual legal issues resulting from the Iraqi kickback defamation, has been looking for a global partner since losing its exclusive possession over Australia’s bulk wheat exports two years ago. In a description to the Australian Securities Exchange yesterday, AWB said Agrium had completed debt diligence and had entered into a scheme implementation agreement with it.
The agreement allows AWB to pay a eventual dividend of up to 20c per share to investors, to be funded by a loan from Agrium.
However, the payout will exist extracted from the offer price.
Agrium chief executive Mike Wilson related the combination of the two companies would provide strategic and fiscal benefits to a wide range of stakeholders.
"We are separately excited about the future of working with AWB employees to reinvest in the concern and bring greater choice of products and services to AWB’s grower customer base," he said.
Mr Wilson said earlier this week that he was separately interested in the Landmark Rural Services business.
Agrium was keen to employ the AWB and Landmark brands but could consider offloading its international trading business.
The acquisition is not expected to raise competition concerns, of the same kind with the AWB-GrainCorp merger had, as Agrium has no operations in Australia. AWB shares shot to a 12-month high of $1.49, up 3c.