AWB Ltd has backed the $1.237 billion bid by Canadian fertiliser company Agrium Inc. to take over the former monopoly wheat marketer.
The AWB board met this afternoon to discuss the bids by Agrium and GrainCorp for the business.
It said a resolution to amend AWB’s 10 per cent shareholding cap to permit the acquisition of AWB shares by Agrium under the scheme would be put to shareholders later this year.
AWB Chairman, Peter Polson said the AWB board believed the Agrium deal represented better value for the company’s shareholders.
“Agrium’s extensive experience in crop inputs and range of products, and commitment to the grain handling business, can only help to better serve our customers,” said Mr Polson.
Agrium has offered $1.50 cash for each AWB share.
The deal also allows for AWB to pay its shareholders a fully franked dividend of up to 20 cents a share to take advantage of existing franking credits before the takeover is executed, but any dividend would be subtracted from the $1.50 share price offer.
The dividend payment would be subject to obtaining a favourable ruling from the Australian Taxation Officer and would be paid for by a loan from Agrium.
GrainCorp did not submit a counter bid for AWB, after proposing a $800 million friendly takeover offer on July 30.
That offer had the backing of the AWB board at the time, but was always subject to a better offer from another buyer.
AWB said as a consequence of its backing of the Agrium offer, the board had withdrawn its previous recommendation of the merger with GrainCorp and would terminate the merger implementation deed between the two companies.
Ten days ago, Agrium swooped with a bid which blew GrainCorp’s offer out of the water.Industry analysts were not expecting GrainCorp to match Agrium, as the bulk handler was still trying to bed down its takeover of United Malt Holdings.
Subject to the Supreme Court making appropriate orders, AWB expected documents on the deal being sent to shareholders in late September or early October.
It said this would contain further detail about the AWB board’s recommendation and an independent expert’s report.
AWB Shareholders will vote at a scheme meeting, about one month later.
If Supreme Court made an order approving the scheme, the deal would become effective on the date determined by the court, and Agrium and AWB were bound to implement the scheme.
Once the takeover is executed, all existing AWB directors are required to resign from the board.
Agrium has the right to appoint its own nominees to the AWB board.Agrium president and chief executive officer Mike Wilson said last week the takeover provided "significant strategic and financial benefits to a wide array of stakeholders''.
"We are particularly excited about the future of working with AWB employees to reinvest in the business and bring a greater choice of products and services to AWB's grower customer base,'' Mr Wilson said.
NSW Farmers Association grains committee chairman Mark Hoskinson said it was "pretty regretful'' the AWB business, which was set up for wheat growers, would be sold off to Canadian interests.
"AWB has now been sold to a Canadian company operating in a country which still has a single desk (for wheat) and we let ours go,'' Mr Hoskinson said.
But he said the controversial restructure of AWB two years ago, which removed grower control of the company's board, had made it "ripe for a takeover''.
