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Agrium to Buy Louis Dreyfus' Fertilizer Unit in Australia

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Agrium Inc .'s AGU Australian ag-retail business, Landmark Operations, Ltd. has entered into an agreement with Louis Dreyfus Company for the acquisition of Macrofertil, a fertilizer distribution business in Australia.

The business, with roughly $120 million in annual sales, includes six fertilizer storage and distribution assets with coating and blending capabilities. Its annual sales exceed 300,000 tons.

The deal subjected to customary closing conditions is expected to be completed in the first quarter of 2018.

Being a leading agribusiness company in Australia, Landmark provides crop inputs, agricultural merchandise as well as agronomic advice and services for wool and livestock sales, finance, insurance and real estate.

Agrium has underperformed the industry it belongs to over the last three months. The company's shares have moved up around 7.7% over this period, compared with roughly 5.8% gain recorded by its industry.

Agrium, last month, revised its earnings guidance for 2017 to the range of $4.65-$4.80 per share (compared with $4.75- $5.25 expected earlier). The company lowered its guidance due to lower production volumes and unfavorable weather conditions which impacted Retail operations, particularly areas impacted by hurricanes.

Agrium expects Retail EBITDA in the range of $1.16-$1.19 billion, and Retail nutrient sales volumes of 9.9-10.2 million tons in 2017. The company anticipates nitrogen production to be 3.3-3.4 million tons. Agrium's expects potash production of 2.4-2.5 million tons in 2017.

The company remains actively focused on expanding its retail business through strategic acquisitions. Agrium has acquired 38 retail locations so far in 2017 with roughly $250 million expected annual sales. The company has a strong pipeline of potential retail acquisitions. Also, Agrium remains focused on managing costs amid a still challenging operating environment.

Moreover, the proposed merger with Potash Corp is expected to create $500 million in annual synergies. The companies have obtained regulatory approval in China, Canada, Russia, India and Brazil for the deal that is expected to close by the end of the fourth quarter of 2017.

However, weak nutrient pricing remains a concern. Nitrogen and phosphate prices remain under pressure due to oversupply. The crop pricing environment is also expected to remain soft in the near term. Lingering impacts from hurricanes may also continue to affect crop protection sales and margin in the fourth quarter.

Agrium Inc. Price and Consensus

Agrium Inc. Price and Consensus | Agrium Inc. Quote

Zacks Rank & Stocks to Consider

Agrium currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO , Koppers Holding Inc. KOP and Westlake Chemical Corporation WLK , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Kronos Worldwide has expected long-term earnings growth of 5%. Its shares have gained 115.8% year to date.

Koppers has expected long-term earnings growth of 18%. Its shares have rallied 20.4% year to date.

Westlake Chemical has expected long-term earnings growth of 10.6%. Its shares have moved up 80.2% year to date.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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