Potash and Agrium to merge in $36 billion US deal

Potash Corporation in the province of Saskatchewan, and Agrium in the neighbouring province of Alberta, will merge. The proposed deal will create an agricultural giant worth $36 billion US.

“That makes an awful lot of sense to me.”

The new firm will have nearly 20,000 employees in 18 countries. Potash’s fertilizing mining operations blended with Calgary-based Agrium’s global direct-to-farmer retail network is a Canadian merger that must still pass regulatory and Competition Bureau approvals.

In 2010 a takeover bid for Potash Corp. by Australia’s BHP Billiton was blocked by the Canadian government as not adequately beneficial for Canada.

Prices have since plummeted, however, with an average realized price in of $154 US per tonne in the second quarter compared with $273 per tonne 12 months ago, and the peak price of nearly $900 a tonne in 2008.

“I look at the strategic fit and I look at combining the world’s largest fertilizer with the world’s largest agricultural retailer,” Chuck Magro, CEO of Agrium, told CBC News. “That makes an awful lot of sense to me.” Magro will have the same role in the new company.

The new company will be headquartered in Saskatoon with offices in Calgary. The deal, expected to close in mid-2017 will see Potash shareholders owning 52 per cent of the new company, and Agrium owners holding the other 48 per cent. 

Agrium, founded in 1931 as part of Cominco, became a publicly traded company in 1993. In Saskatchewan, the government established PotashCorp in 1975 as a Crown corporation. It was privatized in 1989.

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