May 13, 2009 / 7:13 PM / 10 years ago

UPDATE 1-Agrium CEO sees rebound in fertilizer demand

* Sees fertilizer demand rebounding in fall

* Remains committed to acquiring CF Industries (Adds CEO comments; in U.S. dollars unless noted)

By Euan Rocha

TORONTO, May 13 (Reuters) - Farm products company Agrium Inc AGU.TO expects fertilizer demand, which has collapsed amid the global economic downturn, to rebound in the autumn of 2009 and spring of 2010, Chief Executive Mike Wilson said on Wednesday.

“Potash and phosphate are getting significantly squeezed (this spring) and we think our sales will be down as much as 30 to 50 percent. That’s the bad news, the good news is you have to make these nutrients up ... So what we look forward to is the fall of this year and the spring of 2010,” said Wilson, speaking to shareholders at Agrium’s annual meeting.

Wilson said Agrium’s strategy to invest in various geographic regions and product lines has moderated the impact of the recent commodity downturn on the company.

Calgary, Alberta-based Agrium is a major retail supplier of agricultural products and services in both North and South America. It is also a leading global producer and marketer of nitrogen, phosphate and potash fertilizers.

Agrium’s shares, along with those of its peers, have seen some sharp swings over the last two years.

A boom in the commodity space, coupled with tight fertilizer supplies through 2007 and the first half of 2008, sent stocks in the sector soaring. But, tight credit markets and a global economic slowdown have hurt grain prices and the fortunes of companies exposed to the commodity sector.

However, Agrium’s shares, which fell more than 60 percent in the latter half of 2008, have regained some lost ground and are up about 27 percent year-to-date at C$52.68 on the Toronto Stock Exchange.

Agrium, which has been rapidly expanding its business through acquisitions, still plans to double the size of its retail business, said Wilson.

The company is confident that it can meet and even exceed its goal to generate annualized savings of $80 million in 2009, from its acquisition of agricultural products distributor UAP, a year ago.

Wilson also reiterated Agrium’s commitment to its bid for U.S. rival CF Industries (CF.N). CF has rebuffed Agrium’s overtures thus far, but its board is currently reviewing a sweetened bid from Agrium worth about $4.18 billion.

CF has thus far maintained that Agrium’s initial offers undervalued their company and were merely a ploy to derail CF’s own bid for rival Terra Industries TRA.N. Terra’s board has rejected CF’s current offer.

If Agrium is successful in its bid for CF Industries, that would boost its competitive position and triple its capacity to produce phosphate and UAN — a solution of urea and ammonium nitrate in water, which is used as a fertilizer.

“It (the acquisition) is compelling. We don’t do things if they are not compelling from a strategic point of view. And it is not just compelling for Agrium, but compelling for CF shareholders too,” said Wilson.

“We are committed to it, but also we are very disciplined and will not overpay for CF,” he added.

$1=$1.17 Canadian Reporting by Euan Rocha; editing by Rob Wilson

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