Agrium (NYSE:AGU) said that it has received regulatory clearance for its Retail business – Crop Production Services ("CPS") – to buy 16 retail locations in Western Canada from Andrukow Group Solutions Inc. The acquisition is expected to close by mid-Sep 2016. Financial terms of the transaction have not been divulged.
The company also noted that CPS has recently wrapped up the earlier announced purchase of 18 retail locations from Cargill AgHorizons in the northern U.S. Corn-Belt region.
These acquisitions are in sync with Agrium’s goal of growing its retail business across major strategic regions such as the Western Canada and U.S. Corn Belt, and will also enable the company to better serve its customers.
The acquisition of the locations in Western Canada will increase Agrium’s retail presence close to the company’s manufacturing facilities in that region where it can optimize freight and handling. Moreover, the acquired locations in the U.S. Corn Belt will boost the company’s foothold in this key region where it has limited presence.
Agrium saw lower profits in second-quarter 2016 on weak selling prices across all nutrients. However, adjusted earnings beat the Zacks Consensus Estimate. Revenues fell year over year and missed expectations. The company cut its earnings guidance for 2016 factoring in a challenging pricing environment for all nutrients.
Agrium continues to face pricing pressure. It is seeing weak pricing for nitrogen, phosphate and potash as witnessed in the second quarter. Agrium is also facing challenges stemming from a weak crop pricing environment.
Agrium has a Zacks Rank #5 (Strong Sell).
Better-ranked companies in the basic materials space include Innospec Inc. (NASDAQ:IOSP) , Innophos Holdings Inc (NASDAQ:IPHS) and Mitsubishi Chemical Holdings Corporation MTLHY, all carrying a Zacks Rank #1 (Strong Buy).
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