Agricore United is prepared to use a poison pill, if necessary, to kill Saskatchewan Wheat Pool’s hostile takeover bid.
AU director Jon Grant, chair of a special committee dealing with the takeover issue, said last week the company is “not at this time” planning to implement a poison pill.
But it’s a weapon that could be used if that’s what it takes to block the takeover bid.
“One of the objectives we have as a special committee is to allow ourselves as much time as possible to examine all the alternatives that might come available,” Grant said.”So it’s always there for us to use if necessary.”
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
A poison pill is a tool commonly used by target companies to delay or derail hostile takeovers.
It usually means creating rules that would either make it too expensive for the bidder to buy the target company’s shares or reduce the value of the shares held by the bidder.
Such a tactic was used successfully by AU’s predecessor United Grain Growers in 1997 to block a takeover bid by the Manitoba and Alberta wheat pools.
That poison pill would have triggered the issuance of millions of new shares in the event the pools acquired more than 15 percent of UGG’s outstanding shares.
At that point, the pools abandoned their offer.
Rob Assal, a mergers and acquisitions lawyer with Stikeman Elliott of Toronto, said it’s almost certain that AU is preparing a poison pill, and that Sask Pool is preparing a strategy to respond.
“In the normal course of events, the target company would prepare a shareholder rights plan,” he said, adding it’s also no surprise that AU would be tight-lipped about it.
“They’re in their bunker and they don’t want to announce their strategy to the world, especially to the acquirer,” he said.
