AGU Grows Through Acquisitions

Last week, Agrium Inc. (AGU - Analyst Report) announced the acquisition of 24 retail outlets, including 18 farm centers and 6 satellites, from Agriliance. This acquisition has expanded Agrium’s retail operations in Texas and New Mexico.

Along with the 24 retail outlets and associated working capital at these locations, Agrium acquired over 50,000 tons of fertilizer storage. The company expects annual crop input revenues of approximately $150 million from these retail outlets. Through this acquisition, Agrium reaffirmed its commitment to double the size of its retail business.

Further, Agrium stated that it has not lost its focus on acquiring CF Industries Holdings, Inc. (CF - Analyst Report). Earlier this month, the company had increased its offer to acquire all of the outstanding shares of CF Industries Holdings, Inc. Under the terms of the offer, stockholders would receive $45.00 in cash − an increase of $5.00 or 12.5% in the cash consideration − and one common share of Agrium for each CF share.

Agrium expects to become a global leader in nutrient production and distribution, with a combined crop nutrient production capacity of about 17 million tons, through the CF acquisition. If it succeeds in acquiring CF, Agrium would become the world's fourth-largest fertilizer producer.

However, CF rebuffed Agrium’s offer, alleging substantial undervaluation of the company. Meanwhile, since the beginning of the year, it has also been pursuing rival Terra Industries (TRA), who has consistently rejected CF’s proposal on the same grounds.

We maintain a Neutral rating on Agrium.

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