ABB Grain's board has reiterated its support for the $1.6 billion takeover by with Canada's Viterra, promising more international trade muscle at a premium price, in its scheme of arrangement on the deal.
The scheme booklet, set out in two parts, including an independent expert's report that finds the deal fair and reasonable, was lodged late Thursday night with the Australian Securities Exchange, and will be sent to shareholders on Monday.
It fleshes out the basic agreement, announced on May 19, under which Viterra would acquire ABB for $1.6 billion in a cash-and-scrip deal. The deal valued ABB shares at $9.11 to $9.41, including a special cash dividend of 41 cents to be paid by ABB.
The scheme of arrangement offers shareholders three alternatives - a standard consideration, a maximum scrip consideration, and a maximum cash consideration - that it says represents a ''significant premium'' to ABB's trading price before transaction talks were announced.
As of Wednesday, the last day of trading in Viterra shares before the scheme was released, the total value of the standard consideration and the ABB Grain special dividend was $9.37 per ABB share.
The standard consideration comprises $4.35 in cash ($4.76, including the special dividend) and 0.4531 Viterra shares for each ABB share.
The scheme says this represents premiums ranging from 33.9 per cent, to 47.6 per cent and 59.4 per cent on the various days and months before ABB's $7.00 share price on April 27, when talks were first announced.
KPMG, the independent expert, values ABB shares, including the special dividend, at $8.88 to $10.16. Taking into account all three payment alternatives, it values the whole scheme at $9.11 to $10.71 based on a Viterra share price of $C9-$C10 and an assumed Australian dollar/Canadian dollar exchange rate of 0.88.
The scheme also includes a recommendation to scrap the 15 per cent cap in on voting shares in the company constitution to allow the takeover to go ahead.
ABB shareholders will vote on the scheme and the constitutional change at a special meeting on September 9 in Adelaide. Voting forms must be returned by 11am on September 7.
The ABB board said the Viterra offer was much better than any alternatives, including ABB staying as a stand-alone company, divesting certain businesses, or taking over an Australian company. The board said the combined group will have:
The largest exports of wheat, barley and canola, given that Australia and Canada have 37 per cent of these grain exports.
Unprecedented market intelligence.
A more stable earnings and production outlook due to the diverse geographic and weather conditions of the two countries.
Will achieve $30 million in annual synergies within three years.
Australian growers will benefit from Canada's experience in dealing with climate change legislation, and production and storage of genetically modified crops.
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