Insisting its bid to take over Agricore United is not dead, Saskatchewan Wheat Pool has indefinitely extended the deadline to complete the proposed deal.
When the pool announced in early December its intention to buy AU, it set a number of conditions that had to be met before the offer expires Jan. 24.
One of those conditions was that the federal Competition Bureau must complete its review of the proposed deal.
It’s now clear that’s not going to happen, so SWP chief executive Mayo Schmidt said last week the deadline has been pushed back. No new expiry date had been set as of Jan. 15.
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“The bureau has indicated we can expect to have formal discussions with them in February,” he said.
Schmidt added that the takeover bid is “on track” and he praised the bureau for speeding up its review beyond normal standards.
SWP has offered to buy all of AU’s outstanding securities for roughly $1 billion worth of shares, cash and assumed debt. The deal is based on a share swap of 1.3 SWP shares for one AU share.
AU has rejected the bid and urged shareholders not to tender any securities to the pool’s offer.
Another of the pool’s conditions for proceeding with the takeover is that it acquires at least 75 percent of AU’s outstanding securities by the deadline.
Following a recent conversion of convertible debentures, U.S. grain giant Archer Daniels Midland now owns 27.98 percent of AU’s limited voting common shares, up from 23.4 percent.
AU officials say that since ADM has publicly stated that it considers the current terms of the pool’s bid to be inadequate and will not accept the offer, the pool can’t achieve its 75 percent target and the deal is effectively dead.
However Colleen Vancha, vice-president of investor relations for SWP, said the process is unfolding as expected and the company is not discouraged by ADM’s position.
“We were actually heartened by the statement that indicated ADM was willing to look at alternate control transactions, including from the pool,” she said.
In that statement, released by AU Dec. 13, ADM said it was open to considering alternative control transactions that “fairly value AU’s securities.”
Vancha said it’s clear that ADM is crucial to the success of the takeover bid, but declined to say whether the pool has had any direct discussions with ADM as to what would be a fair value.
Nor would she say whether the pool is prepared to sweeten its offer or how many shares have been tendered to the pool’s offer to date.
Meanwhile, on Jan. 10 AU went ahead with previously announced plans to redeem all convertible unsecured debentures to shares, increasing the total number of common shares to 55,227,932.
Debenture holders who voluntarily converted to shares before the pool’s first deadline, including ADM, received a 45 percent premium over those who waited.
