Agrium Says AWB Set to Recommend A$1.2 Billion Offer

Agrium Inc., bidding A$1.2 billion ($1.1 billion) in cash for AWB Ltd., said Australia’s largest wheat exporter favored its offer over a rival stock-based proposal from GrainCorp Ltd.

“AWB has advised that its board considers the Agrium proposal superior to the proposed merger with GrainCorp,” Calgary, Alberta-based Agrium said today in an e-mailed statement.

Purchasing AWB will enable Agrium, North America’s third-largest fertilizer producer by market value, to broaden sales of products, including fertilizers and herbicides, into Australia, the fourth-largest wheat exporter and third-largest shipper of canola. The purchase would give Agrium a base for expansion into Asia, Chief Executive Officer Mike Wilson said this week.

“AWB is clearly in play here and you can’t rule out other interested parties, but Agrium is paying a fair and reasonable price and it may be hard for others to beat it,” Belinda Moore, a Brisbane-based analyst with Royal Bank of Scotland Group Plc, said today. “I think GrainCorp will be unable to match it.”

AWB, based in Melbourne, rose 2.4 percent to A$1.485 on the Australian stock exchange at the 4:10 p.m. Melbourne-time close. GrainCorp, based in Sydney, rose 1.5 percent to A$6.95.

The wheat exporter must give three days notice before withdrawing its earlier recommendation of GrainCorp’s bid, Agrium said. AWB would likely then recommend the A$1.50 a share Agrium deal, the statement said.

Agrium Offer

AWB said today it would make an announcement after the three-day GrainCorp notice period expired, according to a statement filed to the Australian exchange. AWB could pay a dividend of up to 20 cents a share fully franked, subject to a tax office ruling, which would be funded by a loan from Agrium, it said.

GrainCorp, eastern Australia’s largest grain handler, on July 30 offered one share for every 5.75 AWB shares, valuing its bid at A$988 million, based on today’s closing price. David Ginns, spokesman for the Sydney-based company, declined to comment today on any response to the rival offer.

Agrium’s Wilson has completed nine acquisitions valued at about $3.4 billion in the past five years. The company was seeking targets, he said in May after a failed $5.4 billion bid for fertilizer maker CF Industries Holdings Inc.

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