September 11, 2009 / 7:32 PM / 8 years ago

INTERVIEW-Agrium aims to double retail unit's earnings - CEO

* Looks to double retail EBITDA by 2014 through M&A

* To raise $1 bln through equity, debt issues

* Expects FTC approval of CF Industries deal soon (In U.S. dollars unless noted)

By Euan Rocha

TORONTO, Sept 11 (Reuters) - Fertilizer producer and agricultural products retailer Agrium Inc (AGU.TO) plans to double the size of its retail unit's earnings by 2014, primarily through acquisitions in North America, according to Chief Executive Mike Wilson.

Calgary, Alberta-based Agrium's retail unit is projected to make about $500 million in annual earnings before interest, taxes, depreciation and amortization (EBITDA), in a normal year, though earnings this year have been hit by a collapse in fertilizer demand and a margin squeeze.

However, Wilson is confident that a return in regular demand and organic growth will boost retail EBITDA to the $600 million mark by 2014.

"So we have a strategic gap, which we have to fill in retail. We have a lot of experience in filling that and it will be through mergers and acquisitions," Wilson in an interview with Reuters on Thursday.

Agrium was formed in 1993, when the fertilizer division of Cominco Ltd was spun off. The company has since built its retail business through a series of deals, including the acquisitions of Crop Production Services, Western Farm Service, Royster-Clark and UAP.

Agrium is today the largest agricultural products retailer in the United States with over 800 outlets spread across the country.

Wilson, who has worked in the chemical sector for over three decades, sees strong sales of genetically modified seeds driving the organic growth in Agrium's retail business. Seed sales helped buoy the retail unit's earnings in the second quarter and accounted for about $530 million in revenue during the period.

Agrium's share price has more than tripled in value, since Wilson took the reins in 2003. The company's shares were trading around $50 on the new York Stock Exchange on Friday afternoon, up about 50 percent this year alone. In Toronto, the share price was just below C$54.

M&A ANTICIPATED

Agrium is already locked in an extended hostile bid to takeover U.S. fertilizer producer CF Industries (CF.N). [ID:nN17366822] The Canadian company has already arranged financing for the proposed CF deal and it continues to line up finances with an eye to the future.

On Thursday, it said it may raise up to $1 billion through the sale of common shares, preferred shares, debt securities and other instruments over the next two years.

Agrium said net proceeds from the sale will be used to reduce its outstanding indebtedness and to finance future growth opportunities, including acquisitions and investments.

The company also has about $250 million in cash and cash equivalents, along with just under $900 million in unutilized short-term credit facilities.

Wilson also sees an opportunity over the next few years to triple the size of Agrium's nascent advanced technologies unit, which produces controlled-release fertilizers that are used primarily for ornamental plants and golf courses. The business is currently focused on North America but the company is looking to expand that into Europe and Asia.

"In wholesale, you will see us strengthen our global distribution capabilities ... and you will see us looking at opportunities around the world," said Wilson.

Last year's acquisition of a 70 percent stake in Common Market Fertilizers in Europe and Agrium's proposed acquisition of CF Industries are both in part focused at expanding its wholesale distribution network.

Agrium's bid for CF has yet to receive regulatory approval from the U.S. Federal Trade Commission, but the company is confident that this will come through soon.

"I'm hoping that we can resolve any concerns or issues that they may have soon and we are still not expecting any material impact on the deal," said Wilson.

$1=$1.08 Canadian Editing by Rob Wilson

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