Potash Corp, Agrium Provide Update On Merger Of Equals Deal
Zacks Investment Research | Sep 08, 2017 08:23AM ET
Potash Corporation of Saskatchewan Inc. (NYSE:POT) and Agrium Inc. (NYSE:AGU) have provided an update on the status of their proposed merger of equals deal.
The approval process and regulatory review has progressed in all remaining jurisdictions and the companies are working with the Federal Trade Commission and the Canadian Competition Bureau in the United States and Canada respectively, to resolve final issues in nitric acid and superphosphoric acid (SPA).
The Ministry of Commerce in China and the Competition Commission of India have informed the companies regarding their intention to provide respective approvals, provided Potash Corp divests its minority ownership interests in certain offshore entities.
Both companies remain highly confident of completing the deal and believe that the current remedies under consideration will not create any impact on the expected annual operating synergies worth $500 million, which will be created from this merger. However, the companies now expect the transaction to close by the end of fourth-quarter 2017, which was previously expected to be completed in the third quarter.
On Jun 21, Potash Corp. and Agrium announced that once their proposed merger transaction completes, the combined entity will be called “Nutrien”. It will play a critical role in "Feeding the Future" initiative, by acting as the largest global provider of crop services and inputs and help growers to increase sustainable food production.
About the Deal
In September 2016, both companies agreed to merge their businesses to create a fertilizer powerhouse with a pro-forma enterprise value of $36 billion. The merger will create the world’s largest crop nutrient supplier and the integrated company will be better positioned to counter headwinds in the crop nutrient markets.
The combined company will also be able to serve customers and growers better with low-cost, high-value products and services and complementary assets. It will also have the lowest-cost potash production assets and reserves in North America, a balanced portfolio of nutrients and a leading retail distribution platform.
Moreover, the new company will have a strong balance sheet with considerable cash flows, providing it ample flexibility to return excess capital to shareholders and invest in growth while retaining a strong investment grade credit rating profile.
Price Performance
Shares of Potash Corp. have moved up 8.9% in the last three months, underperforming the Zacks Investment Research
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