Agrium seals deal for Viterra retail chain

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Fertilizer and ag retail giant Agrium has formally closed its 18-month-old deal to buy the ag retail assets of Canada’s biggest grain handler.

Calgary-based Agrium announced in March 2012 it had signed a deal with Viterra’s then-suitor, now-owner Glencore Xstrata to buy the bulk of Regina-based Viterra’s retail chain in Canada and Australia for about $300 million.

Canada’s Competition Bureau gave its long-awaited approval to the Agrium deal last month, requiring that Agrium shed eight specific retail stores, and the anhydrous ammonia businesses connected to nine other retail stores, from the combined business in Alberta and Saskatchewan.

Agrium’s agreed-upon purchase also included 13 Viterra retail outlets in Australia. That part of the deal closed in June.

The Canadian end of the deal, completed Tuesday, gives Agrium 210 outlets from Viterra’s chain of 253 retail stores, the remainder of which Glencore has already sold in separate agreements with Richardson International and Federated Co-operatives.

Agrium said Tuesday it now expects annual earnings before interest, taxes, depreciation and amortization (EBITDA) from the Viterra assets, net of divestitures, in the range of $75 million to $90 million.

That estimate doesn’t include “synergies” or the costs of integrating the Viterra outlets into Agrium’s retail business, a process expected to begin “immediately.”

Agrium also said Tuesday it expects to see synergies of $15 million to $20 million by the end of 2015, most of which would be realized that year.

More financial details from this deal are to be made available “in the coming months” after any purchase price adjustments have been finalized, Agrium said.

“Viterra’s assets are an excellent strategic fit for Agrium and we are pleased to have finalized this highly accretive acquisition,” Agrium CEO Mike Wilson said in the company’s release Tuesday.

The deal also comes about six months after Agrium fought off a proxy battle with activist shareholder Jana Partners, a New York hedge fund which sought to have Agrium spin off its ag retail arm from its wholesale business.

Without specifically mentioning that fight, Wilson said Tuesday that “much of the success of this acquisition can be attributed to our integrated strategy. It gave us first access to the opportunity, allowed us to optimize the value of specific divested assets and to maximize potential synergies.” – AGCanada.com Network

Related stories:
Agrium cleared to buy Viterra’s ag retail outlets, Sept. 6, 2013
Proxy fight brewing for Agrium board, Feb. 12, 2013