I NEED A LITTLE TIME TO GET MY HEAD AROUND THIS DEVELOPMENT
Sask Pool makes bid to buy Agricore United to create $1.2-billion company
November 7, 2006 - 17:44
REGINA (CP) - Saskatchewan Wheat Pool Inc. (TSX:SWP) is making a hostile bid to buy Agricore United (TSX:AU) in a deal that would combine Canada's two biggest grain handlers into one business worth more than $1.2 billion.
The stock-and-cash proposal revealed late Tuesday by Regina-based SaskPool would create a company with $4.3 billion in annual revenues with major operations in the three prairie provinces.
The complex bid has a value of about $581 million based on Tuesday share prices for both companies.
If accepted by shareholders of Agricore, a company twice the size of SaskPool, the takeover offer would lead to cost savings - and perhaps some streamlining and job cuts.
But the merged company would still have meaningful operations in Winnipeg and Regina, with an additional office in Alberta, the company said in an announcement after stock markets closed.
Under the offer, SaskPool is offering a share swap deal that would see each Agricore limited voting share exchanged for 1.35 common shares of SaskPool, valuing each Agricore share at $9.32 at Tuesday's closing stock price.
SaskPool would also offer to buy Agricore convertible debentures for stock and will pay $24 in cash for each preferred share.
The Regina company says it hopes to create a lower-cost combined company through "significant" efficiencies including estimated improvements of $60 million a year. However, it did not say whether jobs would be cut or grain handling operations streamlined.
"Our proposal would give Saskatchewan Wheat Pool and Agricore a stronger and more diversified presence amidst the growing demands of a highly competitive marketplace," said SaskPool president and CEO Mayo Schmidt. "We are attempting to create a significant agri-business with decades of expertise, superior assets and a truly unique home grown Canadian advantage. By combining operations we will create the scale and scope of operations to enhance Western Canada's position in a global environment."
Sask Pool appears to be going around Agricore's board of directors and management in making the offer directly to shareholders.
The deal was initially presented to Agricore's chief executive and its chairman on Oct. 24. Sask Pool said it decided to announce the offer Tuesday because it didn't want until Agricore United held its next board meeting in mid-December.
"We are presenting this offer directly to Agricore security holders for their consideration. We believe strongly in the significant benefits this transaction will provide for our respective farmers and destination customers, the industry and our respective shareholders. We believe the advantages are simply too important to ignore," said Pool board chairman Terry Baker, who farms in west-central Saskatchewan.
Baker added that Sask Pool's board of directors fully supports the initiative.
The announcement came after the close of stock trading Tuesday. Earlier, SaskPool shares closed at $6.91, a drop of six cents on the Toronto Stock Exchange.
Agricore shares fell five cents to $8.24.
Agricore had sales last year of nearly $2.8 billion and earned a profit of just over $12.5 million, with a workforce of 2,800.
SaskPool had 1,388 employees at the end of 2005, produced revenues of nearly $1.4 billion and a profit of $12.1 million.
Sask Pool makes bid to buy Agricore United to create $1.2-billion company
November 7, 2006 - 17:44
REGINA (CP) - Saskatchewan Wheat Pool Inc. (TSX:SWP) is making a hostile bid to buy Agricore United (TSX:AU) in a deal that would combine Canada's two biggest grain handlers into one business worth more than $1.2 billion.
The stock-and-cash proposal revealed late Tuesday by Regina-based SaskPool would create a company with $4.3 billion in annual revenues with major operations in the three prairie provinces.
The complex bid has a value of about $581 million based on Tuesday share prices for both companies.
If accepted by shareholders of Agricore, a company twice the size of SaskPool, the takeover offer would lead to cost savings - and perhaps some streamlining and job cuts.
But the merged company would still have meaningful operations in Winnipeg and Regina, with an additional office in Alberta, the company said in an announcement after stock markets closed.
Under the offer, SaskPool is offering a share swap deal that would see each Agricore limited voting share exchanged for 1.35 common shares of SaskPool, valuing each Agricore share at $9.32 at Tuesday's closing stock price.
SaskPool would also offer to buy Agricore convertible debentures for stock and will pay $24 in cash for each preferred share.
The Regina company says it hopes to create a lower-cost combined company through "significant" efficiencies including estimated improvements of $60 million a year. However, it did not say whether jobs would be cut or grain handling operations streamlined.
"Our proposal would give Saskatchewan Wheat Pool and Agricore a stronger and more diversified presence amidst the growing demands of a highly competitive marketplace," said SaskPool president and CEO Mayo Schmidt. "We are attempting to create a significant agri-business with decades of expertise, superior assets and a truly unique home grown Canadian advantage. By combining operations we will create the scale and scope of operations to enhance Western Canada's position in a global environment."
Sask Pool appears to be going around Agricore's board of directors and management in making the offer directly to shareholders.
The deal was initially presented to Agricore's chief executive and its chairman on Oct. 24. Sask Pool said it decided to announce the offer Tuesday because it didn't want until Agricore United held its next board meeting in mid-December.
"We are presenting this offer directly to Agricore security holders for their consideration. We believe strongly in the significant benefits this transaction will provide for our respective farmers and destination customers, the industry and our respective shareholders. We believe the advantages are simply too important to ignore," said Pool board chairman Terry Baker, who farms in west-central Saskatchewan.
Baker added that Sask Pool's board of directors fully supports the initiative.
The announcement came after the close of stock trading Tuesday. Earlier, SaskPool shares closed at $6.91, a drop of six cents on the Toronto Stock Exchange.
Agricore shares fell five cents to $8.24.
Agricore had sales last year of nearly $2.8 billion and earned a profit of just over $12.5 million, with a workforce of 2,800.
SaskPool had 1,388 employees at the end of 2005, produced revenues of nearly $1.4 billion and a profit of $12.1 million.
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