The combined company would have had 2015 net revenue of about $20.6 billion and earnings before interest, taxes, depreciation and amortization (EBITDA) of $4.7 billion before synergies, on a proforma basis, the companies said.
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The deal worth an estimated $36-million USA would bring together PotashCorp’s huge fertilizer mining operations-the world’s largest by capacity-with Calgary-based Agrium’s extensive global direct-to-farmer retail network.
That gives Potash shareholders control of 52% of the merged firm, with 48% going to AGU stock owners.
The name of the new company has not been disclosed.
The merger will happen entirely through a stock swap with no cash changing hands. Potash Corp. and Agrium said Monday, Sept. 12, 2016, that they are combining to create a new Canadian fertilizer company.
Potash Corporation of Saskatchewan (USA) (NYSE:POT) and Agrium Inc.
The merger comes as the global demand for fertilisers is down sharply in emerging countries like Brazil due to the economic downturn.
Agrium Chief Executive Chuck Magro will lead the combined company.
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Under the agreement, PotashCorp shareholders will receive 0.4 of a share of the new company for each common share of PotashCorp they own, while Agrium shareholders will receive 2.23 shares for each Agrium share they own.
Shares in both Potash and Agrium have increased sharply since the two companies confirmed they were in merger talks in late August on the expectation that the combined business could cut costs.
Shares of Potash rose 2.5 per cent to $16.97 before the stock market opened in September 12. Agrium shares were unchanged at $95.21.
The companies had said on August 30 that they were in talks to merge.
The industry has looked for consolidation in the past, with PotashCorp pushing for a US$8.7-billion takeover of K+S Group a year ago that was rebuffed by the German fertilizer group.
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Agrium’s investment bankers are from Barclays Capital Inc. and CIBC Capital Markets. Agrium’s legal advisers are Blake, Cassels & Graydon LLP, Norton Rose Fulbright Canada LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Latham & Watkins LLP. Agrium chief financial officer Steve Douglas would serve as chief integration officer.
