28 October 1996 00:00 [Source: ICB]
The developing shake down of North American fertiliser manufacturers has moved forward with the merger of Canadian players Agrium and Viridian. Carrying the Agrium name, the new company will form the largest nitrogen fertiliser manufacturer in North America with a book value of Can$2.5bn ($1.8bn).
With the tie-up creating two marketing groups, two distribution systems and two transport systems, the deal is expected to lead to a series of job losses and possibly plant closures, the extent of which has not been disclosed yet.
One job loss is certain at present, that of Viridian chairman and ceo Ian Delaney. He will make way for Agrium ceo John van Brunt who will head the new company from Calgary, Alberta.
'The merger further secures our position as a leader in the production and marketing of nitrogen and phosphate fertilisers, by enhancing our ability to better serve our customers through the efficient use of the combined facilities. This is complemented by our major presence in potash and agricultural retail business,' said van Brunt.
Outgoing Viridian chairman and ceo Delaney was equally upbeat: 'This merger will bring together the lowest cost, most efficient manufacturing facilities in North America.'
In a share exchange option, Viridian shareholders will receive 0.975 common shares of Agrium. The group has said that one of its first tasks will be to spend around 10% of its present Can$300m cash balance on buying back outstanding common shares.
Agrium is already the third largest potash producer in North America. The merger comes in the midst of a North American merger frenzy; in the past few weeks PCS acquired Arcadian; this was followed by Mississippi Chemical acquiring the nitrogen assets of First Mississippi.
Completion of the merger is subject to certain conditions including approval from Viridian shareholders and the Canadian and US regulatory authorities.
In the event that the merger is not realised, Viridian has agreed to pay a fee of Can$30m to Agrium.
Agrium reported record second quarter net earnings up from $58.4m to $64.9m. Sales rose from $436.9m to $520.1m.
The company anticipates fertiliser use in North America in 1996 is set to grow 10-15% (ECN 16 September).
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