MAGRO GETS TOP POST
Merger giant names CEO
The merger of Agrium Inc. and Potash Corp. of Saskatchewan Inc. will create one of Canada’s largest corporations and a company run by one of the country’s youngest chief executives.
Chuck Magro, 46, who has been Agrium’s CEO since 2014, was instrumental in leading the US$12.5billion transaction announced Monday.
The zero-premium deal, described by both sides as a merger of equals, will create a fertilizer company with investments spanning 18 countries. It’s the biggest Canadian corporate deal this year after Enbridge Inc.’s $30-billion plan to buy Spectra Energy Corp., which was disclosed last week.
The tie-up with Potash Corp. comes just two months after Calgary-based Agrium agreed to buy a string of farm stores from Cargill Inc. Before then, Magro led his company through a tricky period of declining agricultural-commodity prices, during which its stock has outperformed most of its peers, including Potash Corp.
The company was also regrouping after fighting, and winning, a proxy battle initiated by an activist investor that wanted the company to break up.
“Agrium’s been through a lot,” said Richard Leblanc, an associate professor at York University in Toronto with a specialty in corporate governance. “You really want internal continuity,” which Magro’s appointment represents, he said.
Agrium shares fell 3.6 per cent to $116.67 in Toronto on Tuesday, while Potash Corp. dropped 2.6 per cent to $21.27. The companies have a combined market value of about US$26 billion.
Magro has a chemical-engineering degree from the University of Waterloo and a Masters of Business Administration from the University of Windsor. He held positions at Canada’s Nova Chemicals Corp. before joining Agrium in 2009, where he held positions including chief operating officer, executive vice-president of corporate development and vice-president of manufacturing.
Magro succeeded former Agrium CEO Mike Wilson, who retired in the aftermath of a tussle with activist shareholder Jana Partners LLC. Jana had demanded the company split its retail business from the fertilizer operations, but later said it was pleased with changes Agrium had made, including the return of more capital to investors and a change of management.
Magro is younger than all but 12 of the 212 CEOs of companies in the S&P/TSX Composite Index for whom Bloomberg has data (the average age is 56). His equivalent at Potash Corp., Jochen Tilk, 52, will become executive chairman of the merged and as-yet-unnamed fertilizer company.
The two had known each other for more than two years — their companies are long-standing partners in a joint venture that exports potash fertilizer — and they had “spent many a night and some glasses of wine talking about business and strategy,” Magro said on a conference call Monday.
About a year ago, they discussed the possibilities of working on cost-savings in phosphate, and conversations around a merger advanced from there, Tilk said in an interview.
Mergers often don’t succeed, so companies that do combine need to choose someone who’s experienced and can understand both parties, Leblanc said.
The fact that in the case of Agrium-Potash Corp. a younger CEO was chosen shows that the days of “pale, male, stale and frail” are gone, he said.
“Jochen and I talked about what he wanted to do and what I wanted to do and where we think most importantly we could serve each other,” Magro said in an interview.
“I think it’s an elegant solution and everything else just fell out from there.”