Agrium Inc.AGU

Morningstar Rating

Stock Research and Analysis

by Ben Johnson

From fertilizer manufacturing to retail seed sales, Agrium is well-positioned to capture value throughout the entire agricultural input chain.

Agrium is North America's largest retail distributor of agricultural inputs. Through a string of bolt-on Read more

Bulls Say

Agrium has a solid track record as an acquisitor. For example, the firm quickly exceeded its initial synergy targets for its 2006 Royster Clark acquisition, and we expect this acquisition will ultimately be accretive to the firm's returns on invested capital. We expect a similarly smooth transition as the firm folds in UAP's operations.

Agrium recently owns a 19.6% equity position in Chinese specialty fertilizer producer Hanfeng Evergreen Inc. The firm is a leading producer of controlled-release fertilizers in the world's largest fertilizer market.

Agrium recently announced the necessary financing has been secured to triple the capacity at the existing MOPCO nitrogen facility in Egypt. Agrium owns a 26% equity interest in this cost-advantaged site. Read more

Bears Say

Agrium could be biting off more than it can chew with its bid for CF Industries. Having tacked on some debt to finance its acquisition of UAP and with most of its key markets presently at a standstill, the timing of the firm's bid may be less than perfect.

Nitrogen fertilizer production is inherently volatile as the vast majority of cash production costs are linked to natural gas prices. Read more

Strategy

Agrium's unsolicited bid for CF Industries CF highlights the firm's ambitions to get bigger in the North American wholesale fertilizer production and distribution business. Whether this bid is successful Read more

Management

Michael Wilson joined Agrium in 2000 as COO and was named CEO in 2003. Before joining Agrium, Wilson served as a senior officer of various public chemical companies, including Methanex MEOH and Dow Chemical DOW. We are impressed by the level of disclosure Read more

Profile

Agrium is a combination agricultural distributor and fertilizer producer. Agrium's retail division has nearly 900 global facilities and is North America's largest retail Read more

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