Shares in Agrium (TSE:AGU) (NYSE:AGU) after the market digested the news they are going to acquire Australia’s AWB.
The price offered by Agrium for the company is $1.1 billion, a 57 percent premium over the closing share price of the company on July 29.
AWB is the top agricultural company in Australia, and could be compared to Cargill in North America.
Seeking growth primarily through acquisition, Agrium lost in its bid to acquire CF Industries (NYSE:CF) earlier in 2010, and with few top quality companies to choose from, has chosen to pursue AWB in hopes of not falling too far behind in scale to some of its competitors.
Agrium dropped in price in response to the news, hitting $66.50, a loss of $0.77, or 1.14 percent, at 12:59 PM EDT.
Showing posts with label Cargill. Show all posts
Showing posts with label Cargill. Show all posts
Monday, August 16, 2010
Tuesday, August 19, 2008
Thursday, March 27, 2008
Hedge Fund Buys another Grain Business
ConAgra CEO Gary Rodkin
A number of concerns has led ConAgra Foods Inc. (NYSE: CAG) to sell off their grain business to hedge fund Ospraie.
One of the concerns came from ConAgra shareholders, who have been expressing concerns over the long term impact the extremely volatile trading business would have on ConAgra.
ConAgra CEO Gary Rodkin said the sale will help the company return its focus to its core food operations, while addressing shareholder anxiety over the trading business.
While the commodity trading unit was very profitable for ConAgra during the commodity boom, the tremendous swings in the futures market made it a huge unknown at any one time for the business and its shareholders.
A related problem was the availability of credit to raise money to back margin calls, making it harder to protect their positions.
One grains trader approved of the deal saying about ConAgra, "They can control risk better now that they're just in the food business."
This is the second time this year a grain business has been acquired by a hedge fund, as earlier in the year Whitebox Advisors LLC bought a grain elevator in Minnesota from Cargill Inc.
Some thing this is the beginning of a trend that has opened the door to a flood of these types of deals.
The reason the hedge funds are going this way is to get a better sense of what the physical markets are really doing, so they can make more informed decisions on their trades.
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