Agrium Makes Cash and Debt Bid for Royster Clark

February 05, 2006
Written by Canadian Garden Centre & Nursery
Fertilizer producer Agrium Inc. has made an unsolicited $325-million cash takeover bid for major U.S. agricultural product distributor Royster-Clark Ltd.

Calgary-based Agrium said its offer of $10 per unit for Royster-Clark – a retailer of fertilizer, seeds and pesticides to U.S. farmers with income units listed on the Toronto Stock Exchange – is a 32 per cent premium over its 20-day average trading price.

The purchase of minority interests and the assumption of Royster-Clark’s debt, based on Royster-Clark’s public disclosure documents, estimated at about $210 million, would bring the total acquisition cost to about $535-million.

“Agrium’s offer for Royster-Clark is consistent with our strategy to grow our profitable retail business and allows us to expand our geographic base and our product diversity,” president and CEO Mike Wilson said in a release.

“Royster-Clark’s IPO in July of this year was issued at $10, but the units have traded as low as $7.20. Our offer allows Royster-Clark unitholders to recoup their original investment in addition to distributions on the units.”

Agrium said it will fund the offer from cash on hand and through available lines of credit.
The offer is to expire Dec. 15 and is subject to customary conditions including the tendering of at least 90 per cent of Royster-Clark’s units.

Royster-Clark is a major retail distributor of agricultural nutrients, seed and crop protection products and provider of agronomic services to U.S. growers, with more than $1 billion US in revenue in 2004.

Agrium is a major retail supplier of agricultural products and services in North and South America and a leading global producer and marketer of agricultural nutrients and industrial products.

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