Canada’s Agrium looks to convince shareholders on merger

HOUSTON (ICIS)–Canadian fertilizer producer Agrium confirmed on Friday that it will seek to convince reluctant shareholders on 20 September about the proposed merger with PotashCorp.

While some large shareholders in PotashCorp have publicly stated support for the merger, there has been market talk that Agrium investors have not been as enthusiastic.

Agrium confirmed that its CEO and the CEO from PotashCorp are scheduled to present at the Scotia Fertilizer and Ag conference in Toronto.

The companies issued a joint statement that addressed questions about shareholder reluctance.

“Since announcing our merger, we have talked with many of our largest shareholders. We have been very pleased with the overwhelming support we have received from these shareholders, who recognise the significant value this merger creates. We look forward to closing this transaction during mid-2017 as previously announced, so that we can fully realise the upside ahead,” said Agrium and PotashCorp.

The two fertilizer firms would combine into a new parent company valued at $36bn. Agrium investors stand to receive 2.23 common shares, while PotashCorp shareholders would receive 0.4 common shares. PotashCorp shareholders will hold 52% of the new company, while Agrium shareholders will own 48%.

While the two parties have estimated they will gain approximately $500m in annual operational synergies there has been quite a bit of market discussions over who is gaining the upper hand in the deal with thought that Agrium may not fare as well as PotashCorp, who clearly will have further in-roads to the North American marketplace by acquiring Agrium’s strong retail presence.

There has also been some concern raised that the new entity will still be centered on potash whose market recovery has been slow to develop and is still experiencing weaker demand and lower pricing levels.   

For its part Agrium, whose current top executive Chuck Magro is slated to become CEO of the combined company, has insisted that it is the rare chance to form a balanced and well positioned organization that is poised for the challenges of the fertilizer markets even in periods of extended slumps.

“This is a transformational merger that creates benefits and growth opportunities that neither company could achieve alone. Combining our complementary assets will enable us to serve our customers more efficiently, deliver significant operating synergies and improve our cash flows to provide capital returns and invest in growth,” said Magro.