(article originally posted on my seekingalpha.com blog)
The recent announcement that Agrium wants to buy AWB of Australia is a real head scratcher. Most people remember the never-ending takeover saga for CF Industries in 2009 where Agrium was ultimately unsuccessful. Management worked really hard to convince shareholders that Agrium had to be the "box" on North American nitrogen fertilizer and CF Industries was a "strategic" fit. Barely 12 months later, Agrium (arguably) overpays for an Australian grain handler in a market they don't know in a country they also don't know. Maybe I'm missing something here and yes AWB does have a strong network in Agri-products, but at first blush it appears AGU is more concerned with growth for the sake of growth (through acquisition) than executing on a well defined long-term strategy. The market will decide but I think I'd be inclined to hit the "sell" button until the dust settles on this one.
Disclosure: no positions
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