Big Fertilizer Merger In The Works

If you are a fan of consolidation in agriculture, 2016 has been a banner year so far. Not only are large crop protection product companies talking merger, but several ag retailers – particularly those in the cooperative arena – have as well. Perhaps somewhat quiet on this front has been the fertilizer sector.

But no longer.

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Canadian fertilizer giants Potash Corp. of Saskatchewan Inc. and Agrium Inc. have announced that the two companies have agreed to a merger of equals following a few weeks of preliminary talks. The newly combined company will be the largest crop nutrient supplier in the world with revenues in the $36 billion range. In the North American marketplace, the newly merged company would control nearly two-thirds of the potash capacity, 30% of phosphate production, and 29% of nitrogen capacity.

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According to reports, Potash shareholders will own approximately 52% of the new company with Agrium shareholders holding the balance. The company will be headquartered in Saskatoon, SK, and lead by Agrium Chief Executive Chuck Mango with Potash CEO Jochen Tilk serving as Executive Chairman.

Of course, readers might remember that this isn’t the first time Potash has taken part in the merger process. Back in 2010, Anglo-Australian mining company BHP Billiton Ltd. attempted a hostile takeover bid for the company. However, the Canadian government ultimately stepped in to oppose the deal.

This time is different, say market watchers, because both companies are Canadian-based, so regulators in the country are less likely to object to the pairing. Right now, analysts expect the deal to be finalized by the middle of 2017.

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