The proposed ‘merger of equals’ between PotashCorp and Agrium has been delayed, a press release from PotashCorp's media centre has announced. The joint statement declared that, “Both companies remain highly confident in consummating the merger of equals, but now expect to close the transaction by the end of the fourth quarter of 2017.”
The good news for purchasers of potash and potassium sulfate fertilizer feedstocks is that the delay to the merger is not expected to be long. Company insiders stating that, “The regulatory review and approval process has progressed in all remaining jurisdictions. In Canada and the US, the parties are working with the Canadian Competition Bureau and the Federal Trade Commission to resolve final issues in superphosphoric acid (SPA) and nitric acid.”
The statement continued by outlining how the Chinese and Indian governments were also likely to approve the merger, as soon as “divestment of certain of PotashCorp’s offshore minority ownership interests” had been completed.
The merger will result in the creation of a new company called Nutrien. According to agriproduct specialist Saah J. Cohen at the agriproduct journal PhosphatePrice, the new company is, “… poised to become the world’s number one producer of potash and number two producer of nitrogen fertilizer with operations in 18 markets and more than 20,000 employees globally.”
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The reasons for the merger are clear, with company heads believing that their cooperation could amount to $500 million in cost saving synergies.
Cohen also believes that there is logical thinking behind the marriage, stating that the merger, “will bring PotashCorp’s immense network of fertilizer mines together and connect them with Agrium’s global direct-to-farmer retail network.” A company that is expected to be worth $36 billion.
However, one final stumbling block for the merger is the division of power between Agrium’s current head office located in Calgary, and PotashCorp’s head office in Saskatoon.
At present, it has been agreed that Saskatoon will be the location of the head office, a decision that is supported by Saskatoon’s Premier, Brad Wall. Wall recently commented that his regional government would “look at every option” to make sure that Saskatoon was Nutrien’s true head office. He hopes that Saskatoon will “indisputably [become the location for] the head office” and that it will maintain “the maximum number of head office jobs.”
Meanwhile, Chuck Magro, the CEO of Agrium, and soon-to-be head of Nutrien, has stated he will continue to live in Calgary. He will only maintain an alternative, secondary residence in Saskatoon.
Clearly there remain a few more hurdles to clear and compromises to be made if this marriage is to be successful. However, given the two companies’ blend of potash extraction expertise, and fertilizer retail and supply knowledge it seems that the future is bright for Nutrien even before the marriage certificate has been signed.
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Photo credit: PotashCorp and Agrium
