Agrium Inc. (AGU), a leading Canadian farm dealer and fertilizer producer, has completed the sale of the majority of the commodity management businesses of Australia’s AWB to Cargill Inc for $677 million. The amount includes the repayment of $363-million of working capital funding Agrium has provided to the commodities management businesses since December 15, 2010.

Last year, Agrium acquired AWB for A$1.24 billion with an eye on the company’s prized Landmark farm retail outlets. Agrium said its net purchase price for the Landmark retail operations, after adjusting for both completed and proposed AWB asset sales, is about $800 million.

In December 2010, Agrium announced its intent to sell AWB’s commodity management arm to Cargill, the U.S. agribusiness and trading giant, as it had no strategic interest in the asset.

Agrium continues to evaluate the sale of other parts of the commodity management business that are not being sold to Cargill, which are valued at over $55 million.

In addition to the sale of the Commodity Management business, the pool management operations of AWB Harvest Finance Limited (AWBHF) will be transferred to Cargill. Over the next year, it is expected that AWB Harvest Finance Ltd. will release working capital and reduce associated debt of approximately $330-million.

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.

Last week, the company reported record net earnings of $160 million or $1.02 per share in the first quarter of 2011, surpassing the Zacks Consensus Estimates of 90 cents per share. It also exceeded the prior-year loss of $1.0 million or 1 cent per share.

Including one-time charges, Agrium recorded net earnings of $171 million or $1.09 per share in the first quarter of 2011. Results benefited from record high crop prices and overall strong fundamentals for agriculture and the crop input market. Crop nutrient demand was strong in North America and globally, providing underlying support to crop nutrient prices.

Revenues in the quarter rose 59.8% year over year to $3.0 billion, which was above the Zacks Consensus Estimates of $2.1 billion. The company’s gross profit increased by $363 million to $725 million, primarily due to higher gross profit across all major products.

With the strength in markets across most products and services, Agrium expects a great second quarter and believes industry fundamentals will remain strong in 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.

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