Milling & Baking News - December 28, 2010 - 12

Business 

Cargill acquiring AWB commodity
management business from Agrium
MELBOURNE, AUSTRALIA - Cargill Australia Ltd. has reached an
agreement with Agrium under which
Cargill will acquire the commodities
business Agrium purchased as part of
its acquisition of AWB.
Agrium acquired AWB on Dec. 3
and is selling Cargill only the commodity management business, subject
to various regulatory approvals.
Included in the acquisition is the
former AWB grain marketing and pool
operations, international grain trading businesses, grain distribution and
storage assets and other international
operations.
Cargill said it hopes to complete
the acquisition before the end of June
2011.
"AWB's grain businesses are a great
fit with Cargill Australia's existing
grain and commodity trading operations," said Ralph Selwood, managing
director, Cargill Australia. "It helps us
meet growing food demand in Asia
and around the world, while continuing to give the highest level of customer service to our Australian customers.
"The combined business should accelerate Cargill's growth and provide
value for Australian growers. We are
also very keen to have the high level
talent and expertise of AWB commodity management business added to
our own operations.
"Cargill is committed to marketing Australian farm products for the
benefit of all Australian growers. Our
overall goal is to provide competitive
returns through access to global markets and tools to manage price risk.
We want to preserve existing pool options and enhance future pools with
new tools for growers."
According to Agrium, the purchase

price to be paid by Cargill will be the net
asset value of the acquired businesses
at the completion date of the transaction plus a premium. Agrium said
if the transaction had occurred and the
purchase price had been
determined on the basis
of the net asset value of
the acquired businesses as
of Sept. 30, the aggregate
of the net proceeds from the sale of the
acquired businesses to Cargill, together
with the release of working capital from
AWB Harvest Finance Ltd., a finance
company that supports the ACM business, would have been approximately
A$870 million ($859 million).
Agrium said it is considering the sale
of other pieces of the commodity management business Cargill is not buying
and estimated the value of these businesses at A$55 million ($54.3 million).
"We are pleased to have reached
an agreement for the sale of AWB's
commodity management business
to Cargill, one of the world's leading
grain handlers and traders," said Mike
Wilson, president and chief executive
officer of Agrium. "Agrium indicated
from the outset that we would conduct
a thorough review of the commodity
business with AWB management, and
we believe that this is the best course
of action for all stakeholders involved.
The combination of AWB's commodity management business with Cargill
will be a significant milestone in the
evolution of Australia's grain industry. We believe it will provide dividends for Australian growers through
improved market access, knowledge,
relationships, and expertise in the
world grain trade and as a result will
provide a stronger global marketing
presence for Australian crops.

Horizon closes Topeka flour mill built in 1882
TOPEKA, KAS. - Horizon Milling halted production at its Topeka mill
on Dec. 17, with a small number of employees remaining at the facility
through January 2011 to remove equipment.
According to company officials, the 129-year-old mill has served the
company well, but the plant could no longer efficiently compete without
extensive and costly upgrades. Demolition crews are expected to begin
work in February.
Plans to close the mill first were announced by Horizon, a joint venture
of Cargill and CHS, in January. The mill, with 8,500 cwts of daily milling
capacity, is one of three operated by Horizon in Kansas. At the time of the
initial announcement, the mill had a workforce of 56.
Flour customers currently supplied by the Topeka mill will be supplied
through other Horizon Milling locations, the company said. MBN
12 / December 28, 2010 Milling & Baking News

"Agrium is committed to ensuring
the commodity management divisions
operate on a 'business-as-usual' basis
in the interim and we will continue
to focus on the successful integration
of Landmark in a timely and effective
manner. Agrium is excited to be in the
important Australian agriculture retail
market and will strive to realize the full
strengths and opportunities
that the Landmark business
presents for the benefit of the
Australian grower."
Landmark Rural Services
and commodity management are the
two principal businesses of the AWB,
and Agrium focused on the benefits of
Landmark when it made the acquisition.
Landmark is Australia's largest distributor of merchandise and fertilizer,
with more than 400 locations across
Australia and New Zealand. Services
offered by Landmark include rural
merchandise, crop chemicals, fertilizer,
livestock, wool marketing, agronomy
services and real estate agency services.
The division holds a 50% stake in HiFert, a wholesale fertilizer distribution
company currently held for sale, Australian Wool Handlers and RD1, a New
Zealand farm supply company.
Cargill began operating in Australia
43 years ago and has 1,500 employees
there and in New Zealand. Its operations include 5 manufacturing and
processing plants and 12 grower field
offices in regional and rural Australia.
The company operates grain and
trading as well as beef processing,
food ingredients, food manufacturing
and flour milling businesses.
Emphasizing Cargill's "long-term
commitment" to Australia, Mr. Selwood identified a number of benefits
growers in Australia should expect.
"Combining the AWB commodity
management business with Cargill Australia should provide substantial benefits
to Australian growers," he said. "First,
it will provide growers with innovative
tools to help them manage fluctuations
in commodity prices and, in turn, help
them manage their cash flow.
"Second, Cargill's expertise and
knowledge in shipping large volumes
of commodities should make Australian grain more competitive in more
markets.
"Third, with the combination of
AWB's existing market expertise and
Cargill's global presence and customer
relationships with major grain importers and food companies, Australian
grain growers will have broad access
to international markets and greater
opportunity to increase returns." MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - December 28, 2010

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