Agrium Inc. (AGU), a leading Canadian farm dealer and fertilizer producer announced the purchase of Italian fertilizer distribution company CerealToscana S.A. and its Romanian subsidiary, Agroport, for $27 million plus working capital.
The combined companies have a stable financial record with gross sales of approximately $200 million. The companies sell an estimated 400,000 tonnes of fertilizer a year including commodity and specialty products.
The deal will boost Agrium’s presence in Italy and allow it to enter the Romanian agricultural market. It also complements Agrium Europe’s present fertilizer distribution business in Europe. Agrium Europe currently leases and owns 400,000 tons of dry and liquid storage in Europe with expected annual sales of 2.8 million tonnes of all three major nutrients.
Both Cereal Toscana and Agroport will provide agricultural expertise to Agrium. The acquisition will also allow Agrium to further leverage the value of its marketing off-take agreement of urea from its Egyptian nitrogen facility which is expected to commence in mid-2012.
CerealToscana and Agroport have 90,000 tons of storage with distribution assets in Livorno and Ravenna, Italy, and along the Danube in Romania.
Agrium Inc., based in Alberta, Canada, is a major retailer of agricultural products and services in North and South America and Australia. The company is also a leading global wholesale producer and marketer of all three major agricultural macronutrients − nitrogen, potash, and phosphate − besides being a premier supplier of micronutrients and specialty fertilizers in the U.S. and Canada.
Agrium follows a focused strategy to grow along the value chain through a combination of acquisitions and organic development efforts. Agrium bought Australia’s AWB for $1.1 billion last year sold the former AWB commodity management arm to Cargill Inc in March 2011.
The company faces stiff competition from Potash Corp. of Saskatchewan, Inc. (POT) and CF Industries Holdings, Inc. (CF).
We currently maintain a Zacks #3 Rank (short-term Hold recommendation) on Agrium and a long-term Neutral recommendation.
AGRIUM INC (AGU): Free Stock Analysis Report
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