03 December 2007 15:20 [Source: ICIS news]
HOUSTON (ICIS news)--Canadian fertilizer company Agrium has entered an agreement to acquire US-based United Agri Products (UAP) for $2.65bn, a deal that will create the largest agricultural retailer in North America, the company said on Monday.
The boards of both companies had unanimously approved the agreement, Agrium said. UAP's board has recommended that its shareholders accept Agrium's offer.
The $2.65bn deal was equivalent to $39/share of UAP stock, Agrium said. If approved, the sale should close in early 2008.
"The addition of UAP's business to our own retail operations is an excellent strategic fit for Agrium and a significant step in our strategy of continuing to grow and transform the company," said Mike Wilson, Agrium president.
"The acquisition will significantly expand our geographic base and our product diversity and will offer an opportunity to leverage strengths of both companies," Wilson said.
He expected the deal would create annual synergies of $115m by 2010, largely through enhanced purchasing power.
The combined companies had retail sales of more than $5.2bn in the past 12 months, Agrium said. Overall sales reached $8bn during the same period.
Shares of Agrium were trading at $56.93 on the New York Stock Exchange as of 14:33 GMT, down 1.57%. At the same time, shares of UAP on NASDAQ were at $38.41, up 28.42%($1.00 = €0.68)
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