Agrium Inc (Agrium) has entered into a definitive agreement with Glencore International plc (Glencore) to acquire the majority of Viterra’s Agri-products business upon completion of Glencore’s recently announced supported acquisition of Viterra.
As per 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 USD 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 USD 500 million. In 2011, Viterra’s total Agri-products business generated USD 2.4 billion in revenue and USD 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. 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 USD 1 billion in EBITDA from our global Retail business by 2015,” said Agrium President and CEO Mike Wilson.
Agrium currently operates over 1200 retail facilities in the United States, Australia, Argentina, Canada, Uruguay and Chile.