Canadian Fertilizer Giants Agrium and Potash to Merge
September 12 2016 - 7:20AM
Dow Jones News
Canadian fertilizer giants Agrium Inc. and Potash Corp. of
Saskatchewan Inc. said they would merge to create one of the
largest crop nutrient companies in the world.
Potash shareholders will receive 0.4 common shares of the new
company for each common share they own and Agrium shareholders will
receive 2.23 common shares of the new company for each common share
of Agrium they own. On Friday, Potash shares closed at CAD$124.14
($94.69) and Agrium shares closed at CAD$22.14.
Potash shareholders will own about 52% of the new company and
Agrium shareholders will own about 48%.
The two companies said the merger combines potash, nitrogen and
phosphate production assets with an agricultural retail
network.
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.
The companies first announced they were in preliminary
discussions late last month.
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.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
September 12, 2016 07:05 ET (11:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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