Canada’s Agrium Inc. and Potash Corp. of Saskatchewan Inc. said they would combine, a deal that would create a fertilizer and farm retailing giant with proforma enterprise value of $36 billion but also trigger US regulatory scrutiny. The PotashCorp announced the loss of over 400 jobs as a result of the indefinite suspension of operations at the mine.
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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.
The name of the new company has not been disclosed. For example, in the second quarter, Potash reported prices of $154 per tonne versus $273 per tonne in the year-ago quarter.
“The integrated platform established through our combination will greatly benefit customers and suppliers, and support even greater career development opportunities for employees”, PotashCorp chief executive Jochen Tilk said in a statement. Agrium Chief Executive Officer Chuck Magro will head the combined group.
Calgary, Alberta and Saskatoon, Saskatchewan, September 12, 2016 – Agrium Inc.
Potash shareholders will own about 52 percent of the new company and Agrium shareholders will own about 48 percent.
The merged companies expect to build the company, which would have $20.6-billion in combined revenues this year, by ramping up production of potash and nitrogen-based fertilizer while increasing the scale of their retail network. “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”. US -based Mosaic Co. has closed its potash mine near Colonsay, Sask., until market conditions improve.
BHP Billiton’s bid for Potash in 2010 was turned down by the Canadian government, and Potash in turn was unable to complete last year’s proposed acquisition of German rival K+S Group.
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Analysts expect the deal to face less scrutiny than the BHP proposal because both companies are Canadian, but it will still have to go through regulatory and Competition Bureau approvals. Agrium was founded in 1931 as part of Cominco and became a publicly traded company in 1993.
