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Cargill sells U.S. ag-retail business to Agrium

July 8, 2016
Food & Drink

U.S. grain trader Cargill Inc has agreed to sell its ag-retail business in the United States to farming input seller and distributor Agrium Inc, the companies said on Wednesday.

Calgary-based Agrium, North America’s largest retail seller of crop inputs like seed, fertilizer and pesticides, will acquire 18 ag-retail locations in Nebraska, South Dakota, Minnesota, Wisconsin, Michigan and Indiana. The businesses have annual revenues exceeding $150 million.

The transaction, which does not include Cargill’s Canadian crop input business, is expected to close by the end of the third quarter after a regulatory review, they said.

It is the latest transformative move for privately held Cargill, which has been refocusing its operations by exiting some lower-margin businesses and expanding into higher-margin endeavors like food ingredients and aquaculture.

The 151-year-old grain trader is also trimming some operations in the face of slumping commodities prices and focusing on its core strengths such as grain trading and processing. The company said in February that it would stop selling seeds, fertilizer and crop chemicals in the Black Sea region.

“Cargill will focus on being the world’s leading merchant of grain and oilseeds,” said Roger Watchorn, Cargill’s lead for the North American agricultural supply chain.

Agrium, meanwhile, has been seeking to build or buy more stores in the United States to claim a quarter of the market in the country, CEO Chuck Magro told Reuters in May.

“The (Cargill) locations are in regions where we currently have a limited presence,” Magro said in a release on Wednesday.

The company bought 27 U.S. retail locations in the first quarter.

Agrium shares were moderately higher Wednesday at C$115.75.

By Karl Plume

Source: Reuters

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