CALGARY – Agricore United chief executive officer Brian Hayward told shareholders at the company’s annual meeting what he had been saying publicly for days.
“My personal view is the sweetened offer is trying to breathe life into a corpse,” Hayward said Feb. 9.
While the new offer from Sask Pool, which is trying to take over AU, has more cash in the mix, it is tempered with the risk of taking shares in a new company, said Hayward.
Under the terms, AU shareholders can receive for each AU share either $11.33 in cash, 1.36 SWP common shares, or any combination of the two.
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There are still far too many unknowns surrounding the hostile takeover bid from Sask Pool, said Hayward. The biggest unknown is how the federal Competition Bureau would view the merger of two prairie grain companies, which would reduce competition for farmers’ grain.
“Our view of it is there’s a significant issue here,” said Hayward.
Reduced competition was the main concern for farmers at the AU annual meeting.
Trevor Thompson of Assiniboia, Sask., said farmers live and die by competition and he doesn’t want to see one less grain company.
“We’re very concerned. I don’t want to see them explore any type of merger at this point.”
Competition for farmers’ business for inputs like chemicals and fertilizer isn’t as much of a concern for Thompson because new companies could operate out of a relatively cheap building.
Few people or companies are willing to spend millions of dollars to build grain handling facilities to buy the grain, he said.
“It’s in our best interest to keep as many players as we can,” said Thompson.
Sask Pool said it was continuing to work productively with the Competition Bureau on the proposed merger and expects an initial response by mid-February.
“The Pool continues to believe that the Competition Bureau will allow the transaction to proceed on terms acceptable to the Pool,” said the company in a Feb. 8 news release.
“We believe as strongly as ever that the proposed merger of Agricore and the Pool will be good for western Canadian agribusiness, farmers, and all stakeholders of both companies,” said Pool chief executive officer Mayo Schmidt.
Sask Pool received clearance from the Canadian securities commission to go ahead with its subscription receipt offerings totalling $225 million, one more step in the takeover process.
Schmidt said the market has already passed judgment on the proposal by increasing AU’s stock price from $8.25 in November, when the company announced its takeover attempt, to its present value of $11.75.
Hayward said the share offering doesn’t reflect the true value of AU.
