Saskatchewan Wheat Pool’s takeover attempt of Agricore United is far from over, chief executive officer Mayo Schmidt said Dec. 13, the same day the AU board recommended shareholders reject the deal.
Schmidt told reporters at the pool’s annual meeting that AU’s response was not a surprise and the process was going ahead as expected.
He said he had not yet read AU’s circular, which called the proposal financially inadequate.
But he said he had been travelling and meeting with pool and AU shareholders since the Nov. 7 offer was made.
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“In meeting with AU shareholders there was substantial support and confirmation that they believe this transaction should go forward,” Schmidt said.
He noted that AU share prices had climbed 36 percent since Nov. 7 and shareholders would have to consider that increased value in making their decisions.
“We will reflect and review the issues that they bring up, being competition bureau, synergies and price … and make decisions on how to respond going forward,” Schmidt said of AU’s concerns.
Sask Pool has offered 1.35 of its shares for each common AU share, $24 in cash for each outstanding preferred share and would exchange convertible debentures for shares.
Under the proposal, Sask Pool requires 75 percent of AU’s shares.
Schmidt has not yet met with Archer Daniels Midland, which owns 28 percent of AU’s common shares. ADM said it doesn’t like the deal either but is willing to consider “alternative transactions.”
When the offer was first made, ADM owned 24 percent but Schmidt said the increase in ADM’s ownership percentage wasn’t a move to block the takeover. Rather, it came about through a conversion of convertible debt.
“It will be a period of time as this project matures before we would have any direct discussions with ADM,” Schmidt said.
He has estimated the combined company would result in savings of $60 million annually.
AU CEO Brian Hayward last week said Sask Pool had not responded to two letters asking for more details about the proposed synergies, but Schmidt pointed to the public statements he has made about savings.
“Being that both companies are in the same business we think it’s quite evident as to where and what the synergies are about,” Schmidt said.
“If that hasn’t addressed their issues … we’re prepared to continue to work toward clarifying anything that they find difficult to understand.”
Creating a strong Canadian grain company to compete in the international marketplace is still the goal, he added.
Schmidt noted this attempt to combine two companies comes at a time when both are doing well.
“As much as this is an offensive tactic, in terms of trying to put these two great companies together, keep in mind that combinations typically happen in times of difficulty, drought and financial crisis,” Schmidt said.
Former pool president Garf Stevenson said he liked the idea of one large company that can compete on the world stage.
“I have no troubles with it at all,” he said of the pool’s move. “I think it was a wise proposal and I wish them every success.”
