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A merger between Potash Corp. of Saskatchewan Inc. and Agrium Inc. will face steep antitrust hurdles in Canada and the United States, as the Canadian fertilizer producers vie to become a global agriculture powerhouse.
The companies, which are in preliminary talks to merge, are two of the three major potash suppliers in North America, as well as big players in other crop nutrients such as nitrogen and phosphate.
The potential deal, with a combined market value of $37-billion, would increase their market share in fertilizer and put them in the crosshairs of antitrust regulators on both sides of the border.
“It’s going to be very heavily scrutinized,” said Chris Hersh, an antitrust lawyer with Cassels Brock & Blackwell LLP. “You see major overlaps in both potash and nitrogen. They compete with each other and the marketplace is a fairly concentrated marketplace.”
Saskatoon-based Potash Corp. is the world’s largest producer of fertilizer by capacity and controls nearly half of potash capacity in North America. A merger would boost its position to 62 per cent, and give the new company a 30-per-cent market share in nitrogen and a similar position in phosphate, according to National Bank Financial.
A merger would leave one main potash rival in North America – U.S.-based Mosaic Co., which controls 35 per cent of the capacity in the market. In Canada, Potash Corp. operates five potash mines in Saskatchewan and Agrium operates one in the province.
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