The fate of Agricore United could be determined by the end of this week.
Under the terms of its Feb. 21 agreement with AU, James Richardson International has until April 20 to decide whether to continue the battle with Saskatchewan Wheat Pool to take over the country’s biggest grain company.
If it does, its agreement to combine with AU into a single company could go ahead, barring yet another, even richer Pool offer.
If it doesn’t, then AU will pay JRI a $24 million termination fee, and the Pool will be in a position to successfully conclude its five-month-long battle to take over AU.
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JRI officials could not be reached for comment as to whether the company will match or better the Pool’s offer.
The Pool upped the ante considerably on April 13, dangling a new, richer offer that would be available to AU shareholders once the company terminates its agreement to combine with JRI.
The latest bid would provide AU shareholders with $20 in cash or 2.2 Pool shares in return for each AU share, or a combination of the two to a maximum of $14 and 0.66 Pool shares per AU share.
The offer is open until April 23.
An analysis by BMO Capital Markets pegs the total value of the offers as follows, expressed as dollars per AU share: JRI $13.02; SWP’s March 29 bid $16.13 and SWP’s April 13 bid $19.66.
Pool chief executive officer Mayo Schmidt described the April 13 offer as the company’s “very best proposal.”
In a news release issued that same day, AU’s board of directors said the Pool’s bid was superior to JRI’s, thus forcing JRI to match it or lose out.
AU chief executive officer Brian Hayward said it was a relatively easy decision to make, after meeting with Pool officials and comparing the benefits to AU shareholders from the respective proposals.
“Our job as an organization is to look at the situation and ask ourselves what is the best result for shareholders,” he said.
He noted that during confidential discussions undertaken after the March 29 bid, the Pool dealt with the questions and concerns that had led AU to reject its previous bids, including the total value of the bid, the cash component, competition issues and potential synergies.
“If you take those two snapshots and lay them side by side, it’s quite a different picture now,” Hayward said.
However, he noted that AU’s formal advice to shareholders is to take no action on the Pool’s bid, pending an announcement by JRI of its intentions.
The total value of the Pool’s latest offer is about $1.75 billion, made up of cash, shares and acquired AU debt. The original offer in November was worth about $1 billion.
AU’s share price jumped by more than $3 to $19.53 on the day the latest offer was unveiled.
The Pool’s share price dipped slightly that day to $8.54 for technical trading reasons but rebounded on the next trading day to $8.67.
