Potash Corp. and Agrium announce plans for merger

September 12, 2016

Potash Corp. of Saskatchewan and Agrium announced that the companies will merge to create a mega company worth nearly $36 billion, including dept.

The Wall Street Journal reported that the merger of the Canadian companies will result in one of the largest crop nutrient companies in the world that will have an annual revenue of about $20.6 billion and will employee nearly 20,000 people.

Potash shareholders will own about 52 percent of the new company and Agrium shareholders will own about 48 percent.

The two companies said the merger combines potash, nitrogen and phosphate production assets with an agricultural retail network. Nitrogen, phosphorous and potash, a compound of potassium, are essential for plant life. Modern farmers uses these primary nutrients in large amounts plus additional ones to assure plant health and proper ripening.

A merger would help Saskatchewan-based Potash, the world’s largest fertilizer producer by capacity, insulate its earnings against volatile moves in crop nutrient prices by giving it access to Agrium’s steadier retail business that sells fertilizer, seeds and other products to farmers.

For Calgary-based Agrium, the deal would greatly expand its product of potash and other fertilizer ingredients, representing a bet that demand and prices for these products have bottomed and are poised for a rebound.

The companies estimate that the deal will generate up to $500 million in annual operating synergies from distribution and retail integration, production and general expense optimization and procurement benefits.

Potash’s Chief Executive Jochen Tilk will be executive chairman of the combined company and Agrium’s chief, Chuck Magro, will be CEO. The new company will be based in Saskatoon, Potash’s current headquarters.

The deal is expected to close in mid-2017 and is subject customary closing conditions, including approvals by regulators, Canadian courts and shareholders.

The merger between Potash and Agrium adds to a string of transactions involving the global farming sector, including the pending merger of Dow Chemical Co. and DuPont Co. and China National Chemical Corp.’s planned takeover of Swiss pesticide and seed company Syngenta AG.

U.S. lawmakers said last month that they plan to hold a hearing to examine this wave of mergers, saying the deals could potentially reduce competition and lead to higher prices.



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