Potash Corp, Agrium to
merge to create $36 billion company
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[September 12, 2016]
(Reuters) - Canada's Agrium Inc and
Potash Corp of Saskatchewan Inc said they would combine, a deal that
would create a fertilizer and farm retailing giant with proforma
enterprise value of $36 billion but also trigger U.S. regulatory
Potash Corp, the world's biggest crop nutrient company by capacity and
Agrium, North America's largest farm retailer, said the combined company
will be largest crop nutrient company in the world and third largest
natural resource company in Canada.
The companies had said on Aug. 30 that they were in talks to merge. The
merger will create a company dominant in North America, controlling
nearly two-thirds of potash capacity, 30 percent of phosphate production
capability and 29 percent of nitrogen capacity, National Bank analyst
Greg Colman had said at the time.
The deal would be the latest in a string of agriculture merger attempts,
including potential combinations of seed giants Monsanto Co and Bayer
AG, and ChemChina [CNNCC.UL] and Syngenta.
Fertilizer companies have suffered lower profits as crop nutrient prices
tumbled due to excessive supply and weak demand. Crop prices have also
been hurt, with corn and wheat at seven-year and 10-year lows
respectively, giving farmers less incentive to maximize production with
Potash Corp shareholders will get 0.400 common shares of the combined
company for each share they hold and Agrium shareholders will get 2.230
common shares for each share they own, the companies said on Monday.
Potash Corp U.S.-listed shares were up slightly at $17.03 in light
premarket trading. Agrium U.S.-listed shares, which closed at $95.21 on
Friday, were untraded.
Potash Corp shareholders will own about 52 percent of the new company,
with Agrium shareholders owning the rest after the deal closes, which is
The combined company would have had 2015 net revenue of about $20.6
billion and earnings before interest, taxes, depreciation and
amortization (EBITDA) of $4.7 billion before synergies, on a proforma
basis, the companies said.
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Chris McKay, PotashCorp load-out supervisor at the Cory Mine,
examines potash inside one of the storage facilities near Saskatoon,
Saskatchewan October 10, 2013. REUTERS/David Stobbe
The companies expect annual operating synergies of up to $500 million from the
Agrium Chief Executive Chuck Magro will lead the combined company. Potash Corp
CEO Jochen Tilk will be its executive chairman.
Barclays Capital Inc and CIBC Capital Markets are Agrium's financial advisers,
while BofA Merrill Lynch and RBC Capital Markets are Potash Corp's financial
Morgan Stanley & Co LLC is serving as joint financial adviser to Agrium and
Stikeman Elliott LLP and Jones Day are serving as legal advisers to Potash Corp.
Agrium's legal advisers are Blake, Cassels & Graydon LLP, Norton Rose Fulbright
Canada LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Latham &
(Reporting by Siddharth Cavale in Bengaluru; Editing by Kirti Pandey and Savio
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