Canada grain companies agree tomerge
August 01, 2001
by Emily Wilson
Two of Canada’s leading grain companies, Agricore and United Grain Growers, have agreed to merge to create a new publicly listed company, Agricore United. The merger is expected to create cost savings in excess of C$50 million.
Using UGG’s existing structure, Agricore shareholders and members will have their equity converted into shares of the merged company, receiving about 20.5 million shares out of a total of 37.3 million that will be outstanding. Based on UGG’s recent share price, the new company would have a combined market capitalization of C$450 million, which would rank it among Canada’s leading enterprises.
"Structuring the business combination in this way will provide Agricore members with immediate access to their equity if they so choose," the companies noted. "The shares they receive in exchange for their equity in Agricore will be publicly traded."
U.S.-based Archer Daniels Midland Co., which is a significant shareholder in UGG, will have its ownership position reduced to about 19%, but will be able to exercise pre-emptive rights to acquire additional shares that will give it a maximum interest of 25% in the merged company.