Saskatchewan Wheat Pool Inc. (TSX:SWP) says a hostile takeover of rival grain handler Agricore United (TSX:AU) isn’t dead, despite Agricore’s rejection of the deal as “financially inadequate.” Winnipeg-based Agricore urged its shareholders not to tender to the deal, which values Agricore at about $700 million. Agricore’s move was widely expected after the company’s CEO indicated last month that the bid was insufficient. Pool president and CEO Mayo Schmidt admitted after the company’s annual meeting in Regina that Agricore’s response was not a surprise, but said that the process was pressing ahead. “In meeting with AU shareholders there was substantial support and confirmation that they believe this transaction should go forward,” Schmidt told reporters. “Secondly, is that since we announced the transaction Agricore United share price is up 36 per cent,” said Schmidt. “We believe that all the shareholders will look at those as important issues.” But the all-share bid is uncertain and subject to risks, Agricore said. “A special committee concluded that the SaskPool offers are financially inadequate and significantly undervalue Agricore United,” Jon Grant, chairman of a special committee of the board set up to review the bid, said in a conference call. “The value is highly uncertain and poses a number of significant risks for Agricore United security holders.” SaskPool has offered 1.35 shares for each outstanding Agricore United common share, 18 shares for each outstanding $100 in convertible, unsecured subordinated debentures and $24 for each outstanding preferred share. Among its objections to the deal, Agricore’s board said it believes the proposed exchange ratio undervalues Agricore’s contribution to the merged companies and doesn’t offer a high premium for change of control. Schmidt countered that he believed there was support in the “potential success of the combination” in the trading world. “The marketplace has shown the confidence, both in Saskatchewan Wheat Pool and in the transaction,” said Schmidt. “The shareholders today also will have to contemplate if the transaction doesn’t occur what will happen to that 36-per-cent increase in value.” Schmidt called it a fair proposal that would enhance Western Canada’s position in the global agriculture environment. Agricore said it is pursuing alternatives to the SaskPool proposal, but did not give details of any negotiations with prospective bidders. “Saskpool would have you believe that a hostile takeover is the only way for Canada to establish a global agribusiness and to achieve efficiencies in the Canadian grain industry,” Agricore CEO Brian Hayward said. “We simply do not agree.” To bolster its rejection, Agricore consulted 28-per-cent shareholder Archer Daniels Midland Co., which has indicated it won’t tender to the offer. That would make it impossible for SaskPool to reach its stated condition of 75 per cent acceptance.