BY Fraser Tennant
In an agreement that it is said will result in a world-class integrated global supplier of crop units, Agrium Inc and Potash Corporation of Saskatchewan Inc have announced that they are to merge in a deal with an enterprise value of $36bn.
This merger of equals between Agrium, the largest crop nutrient company in the world, and Potash, the third largest natural resource company in Canada, will, following the close of the transaction, see Potash shareholders own approximately 52 percent of the new company, while Agrium shareholders will own approximately 48 percent on a fully diluted basis.
The new company – with 20,000 employees and operations and investments in 18 countries – will combine low-cost, world-class potash and high-quality nitrogen and phosphate production assets with a premier agricultural retail network to forge an integrated crop inputs platform.
“Our merger creates a new premier Canadian-headquartered company that reflects our shared commitment to creating value and unlocking growth potential for shareholders”, said Jochen Tilk, president and chief executive of Potash. “The integrated platform established through our combination will greatly benefit customers and suppliers, and support even greater career development opportunities for employees.”
Mr Tilk, part of a proven team that reflects the strengths and capabilities of both companies, will serve as the new entities’ executive chairman, while Chuck Magro, currently Agrium’s chief executive , will retain that role in the new set up. Both will report to the new board of directors.
“This is a transformational merger that creates benefits and growth opportunities that neither company could achieve alone," said Mr Magro. “Combining our complementary assets will enable us to serve our customers more efficiently, deliver significant operating synergies and improve our cash flows to provide capital returns and invest in growth.”
The name of the new company, which will have its registered head office in Saskatoon, with Canadian corporate offices in both Calgary and Saskatoon, will be announced prior to the closing of the transaction.
Mr Tilk concluded: “Our workforce and the communities in which we operate are critical to both PotashCorp and Agrium, and we intend to carry forward best practices from both companies in corporate social responsibility, including commitments to employees, operating communities and the environment.”