Potash and Agrium agree to merge

New company could be worth about $36 billion

By Diego Flammini
Assistant Editor, North American Content
Farms.com

Potash Corp and Agrium agreed to a merger of equals, effectively creating the world’s largest producer of potash and second largest producer of nitrogen fertilizer.

In a joint release, the companies said the merger allows them to “be better positioned to serve customers and farmers with low-cost, high-value products and services, with continued emphasis of efficiency and innovation.”

The merger still needs to pass two level of approval to ensure the deal is fair across the board.

“They just want to make sure that no one organization is going to have market dominance,” Brooke Dobni, a professor at the University of Saskatchewan’s Edwards School of Business, told CBC.

Dobni said another obstacle facing the merger is political. Potash Corp was formed by the provincial government in 1975 and became privatized in 1989.

"It's going to be harder for the government of Saskatchewan to say no or we're not sure," Dobni said. "These are publicly traded companies and the shareholders are the owners."

But those involved with the deal feel it’s the right fit for both companies.

“I look at the strategic fit and I look at combining the world’s largest fertilizer with the world’s largest agricultural retailer,” Chuck Magro, CEO of Agrium, told CBC. (Magro will also hold the same title with the new company.) “That makes an awful lot of sense to me.”