Royster-Clark urges rejection of Agrium takeover
Wed Nov 23, 2005 01:56 PM ET
CALGARY, Alberta, Nov 23 (Reuters) - Royster-Clark urged its investors on Wednesday to reject Agrium Inc's hostile takeover offer, saying the Canadian fertilizer maker's C$535 million ($457 million) bid does not recognize its full value.
The board of Royster-Clark, an income trust that sells fertilizer and herbicides in the Southeastern and Midwestern United States, said in a circular that the offer is inadequate, opportunistic, coercive and fails to reflect Royster-Clark's strong financial position.
Calgary-based Agrium, Canada's second-largest fertilizer producer, made the unsolicited bid on Nov. 8, offering C$10 per trust unit, a 27 percent premium from the market price before the announcement.
It extended its shopping spree on Wednesday, acquiring Spectrum Brands Inc.'s Nu-Gro fertilizer technology and Canadian professional products divisions for $86 million.
Royster-Clark said it is talks with a number of other firms that have expressed interest in launching bids to rival Agrium's.
Its trust units were up 5 Canadian cents at C$10.40 on the Toronto Stock Exchange on Wednesday. Agrium slipped 3 Canadian cents to C$23.92.
Besides offering C$325 million for the trust units, Agrium would also assume minority interests and debt, bringing the deal's value to C$535 million.
Royster-Clark's board said Agrium is seeking to take advantage of temporarily weak market conditions, caused by the effects of devastating hurricanes in the U.S. Gulf Coast region and Ottawa's review of its tax treatment of income trusts.
In addition, the offer ignores the positive impact of Royster-Clark's pending sale of its East Dubuque nitrogen plant, which will generate proceeds of $50 million, it said.
For its part, Agrium said it had taken the objections into consideration, but was not wavering from the terms of its bid.
"We still think that our offer is full and fair," spokeswoman Christine Gillespie said.
Agrium has said its offer is in line with a strategy to expand its profitable retail unit. It also said the deal will boost earnings and cash flow.
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