Deal done as fertilizer industry struggles with plummeting prices down more than 80% in eight years
Potash Corp. of Saskatchewan and Agrium have agreed to merge in a deal that would create a global agricultural giant worth an estimated $36 billion US.
The deal would bring together Saskatoon-based PotashCorp’s huge fertilizer mining operations — the world’s largest by capacity — with Calgary-based Agrium’s extensive global direct-to-farmer retail network. Both companies say the new firm would have close to 20,000 employees, with operations in 18 countries.
Under the terms of the proposed deal, existing Potash shareholders would get 0.4 shares in the new company for every Potash share they own. Agrium shareholders would see their shares converted into 2.23 shares in the new , as yet unnamed, company, which would be headquartered in Saskatoon but have offices in Calgary, too.
At those ratios, Potash shareholders would own 52 per cent of the new company, while Agrium owners would hold the other 48 per cent. The deal is expected to close in the middle of next year. Shares in both countries were largely unchanged on the TSX on Monday, but both stocks saw jumps in their share prices earlier this month when rumours of a merger started to circulate.
The deal comes as the fertilizer industry struggles with a steep drop in prices in recent years following a ramp-up of production and the breakup of a Russia-Belarus potash trading cartel in 2013.
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