Agrium – CPS Parent – And PotashCorp Announce Merger Agreement

Agrium Inc. and Potash Corporation of Saskatchewan Inc. today announced that they have agreed to combine “in a merger of equals to create a world-class integrated global supplier of crop inputs,” according to a press release this morning.

Both companies are based in Canada. Agrium is involved in the retail ag sales in the U.S. under the Crop Production Services Brand.

Under the agreement – already approved by both borads of directors – a new parent company will be formed to own both companies. PotashCorp shareholders will receive 0.400 common shares of the new company for each common share of PotashCorp they own, and Agrium shareholders will receive 2.230 common shares of the new company for each common share of Agrium they own.

PotashCorp shareholders will own approximately 52 percent of the new company, and Agrium shareholders will own approximately 48 percent on a fully diluted basis.

The new company, to be named prior to the transaction’s closing, “combines low-cost, world-class potash and high-quality nitrogen and phosphate production assets with a premier agricultural retail network to forge an integrated crop inputs platform to better serve customers,” according to the release.

The new company will have nearly 20,000 people on its payroll. It will include operations and investments in 18 countries. The release said the new entitity will have a pro forma enterprise value of US$36 billion, based on each company’s net debt as of June 30, 2016, and the current shares outstanding and respective closing share prices of the companies on the NYSE on August 29, 2016.

On a 2015 pro forma basis, the new company would have had net revenue of approximately US$20.6 billion and EBITDA of US$4.7 billion before synergies.

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“Our merger creates a new premier Canadian-headquartered company that reflects our shared commitment to creating value and unlocking growth potential for shareholders,” said PotashCorp President and Chief Executive Officer Jochen Tilk. “The integrated platform established through our combination will greatly benefit customers and suppliers, and support even greater career development opportunities for employees. ”

Agrium President and CEO Chuck Magro said that the deal 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.”

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