Fer­til­izer merger may face reg­u­la­tors’ scru­tiny


Cana­dian fer­til­izer pro­duc­ers Po­tash Corp of Saskatchewan Inc and Agrium Inc agreed to com­bine to nav­i­gate a se­vere in­dus­try slump by boost­ing ef­fi­ciency and cut­ting costs, but the new com­pany’s po­ten­tial pric­ing power may at­tract tough reg­u­la­tory scru­tiny.

The pro­posed all-stock tieup an­nounced on Mon­day comes as in­dus­try prof­its have fallen due to ex­ces­sive sup­ply and soft farm in­comes. It would com­bine Po­tash’s crop nu­tri­ent pro­duc­tion ca­pac­ity, the world’s largest, with Agrium’s farm re­tail net­work, North Amer­ica’s big­gest, plus its own po­tash mine and fer­til­izer plants.

Po­tash share­hold­ers will own 52 per­cent of the new com­pany, with a mar­ket cap­i­tal­iza­tion of $26 bil­lion. Agrium share­hold­ers will own the rest if the deal closes in mid-2017 as planned.

Agrium Chief Ex­ec­u­tive Of­fi­cer Chuck Ma­gro will be CEO of the merged com­pany. Po­tash Chief Ex­ec­u­tive Jochen Tilk, who will be­come ex­ec­u­tive chair­man, said the struc­ture would cre­ate an “equal part­ner­ship”.

“Chuck and I will run this com­pany to­gether,” he said in an in­ter­view.

Tilk said he was con­fi­dent the trans­ac­tion would re­ceive reg­u­la­tors’ ap­proval as pro­posed, with­out the need for di­vesti­tures.

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