UAP Holding Corp.’s decision to sell to Calgary, Alberta-based rival Agrium Inc. for $2.65 billion shouldn’t cost many jobs, but it will cost Weld County its largest public company.
The deal, announced Monday, would unite two big players in the agricultural industry. UAP sells more than $3.2 billion in agricultural products a year, including herbicides and pesticides.
Agrium is on track to generate around $5 billion in revenues this year, mostly through the sale of nutrients and fertilizers.
The UAP jobs most at risk are those that overlap with those in Agrium’s corporate headquarters.
“At the top of the house, there will be some changes,” Agrium chief executive Michael Wilson said in a conference call.
The combination is expected to achieve $115 million in annual cost savings by 2010, mostly through improved efficiencies in distribution.
“It would not appear to be too disruptive. There will be a few people without jobs. You might be talking to one,” said Karla Kimrey, UAP’s vice president of investor relations.
UAP employs more than 3,000 workers across 370 distribution and retail locations around the country. It has about 275 workers on the west side of Greeley, Kimrey said.
UAP has a strong presence in Texas, Oklahoma, Florida and the northern Plains states, while Agrium is strong in the Pacific Northwest, California and the Eastern seaboard.
A combined Agrium and UAP will rank as the country’s largest provider of farm chemicals, with a 15 percent share of the overall market.
Increased demand for corn to produce ethanol, a gasoline substitute, has caused many crop prices to spike.
Wheat and corn have doubled from historic levels, and soybean prices are running about 75 percent higher.
With inventories low, more acres each year are being put into production, creating a strong backdrop for the two companies to unite, Wilson said.
Agrium is making a tender offer of $39 a share in cash for UAP, a 30 percent premium to UAP’s share price last week.
UAP shares rose $8.37, or 28 percent, to close at $38.28 per share in heavy trading Monday. The bulk of its shares are held by mutual funds and other institutional investors.
UAP’s predecessor was part of ConAgra, which sold it to the Apollo Group four years ago, Kimrey said. Apollo then took UAP public about three years ago, making it Weld County’s largest public company.
“It does raise the prestige of the community to have a publicly traded company,” said Larry Burkhardt, president of Upstate Colorado Economic Development.
“We are interested in wages and the economic spin off this (deal).”
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
