Less than two weeks after Agrium Inc. closed its $1.24-billion acquisition of AWB Ltd., the Calgary-based company has turned around and divested a big chunk of the company.
Cargill Inc. scooped up the majority of AWB's commodity management business for about $630-million, worth $840-million with debt, and Agrium is looking to sell more related assets, which could bring the total sale value to around $925-million.
Subtracting what Cargill is paying from the purchase price for AWB, Agrium made around a $550-million acquisition.
That changes the metrics of the initial deal. The Landmark retail division of AWB, which Agrium is keeping, generated $69-million in earnings before interest, taxes, depreciation and amortization in fiscal 2010. In the first year under integration, the division is expected to generate $81-million of EBITDA, which includes about $17-million in synergies.
Looking back, it was clear that Agrium was really only focused on the retail side of the business all along. At the time of the initial deal with AWB, Agrium president and chief executive officer Mike Wilson said the deal "would continue Agrium's strategy of growing its retail business. Agrium sees significant potential to enhance the product and service offerings to the Australian and New Zealand grower, particularly through AWB's retail Landmark Rural Services division..."
This retail division distributes merchandise and fertilizer at 400 locations across Australia and New Zealand. Products and services include crop chemicals, fertilizer, livestock, wool marketing, agronomy services and real estate agency services. Landmark also has a 50 per cent stake in Hi-Fert, which is a wholesale fertilizer distribution company.
Eds note: An earlier version of this post had Agrium's cost at $315-million, but that did not account for debt.
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