PotashCorp of Saskatchewan, the world's largest potash supplier, and its rival Agrium are in talks to combine in a deal that could create a near-$30 billion (€27bn) fertiliser giant.
The move comes a year after PotashCorp failed to acquire Germany’s K+S and as the Canadian company continues its efforts to consolidate an industry marred by falling commodity and equity prices.
Although the structure and terms of the deal were unknown, those briefed about the deal said the transaction would be a merger of equals, which suggests that the combination is likely to be all in stock.
‘No decision’
In a short statement PotashCorp warned that “no decision has been made as to whether to proceed with such a combination, no agreement has been reached, and there can be no assurance that any transaction will result from these discussions”.
Shares in PotashCorp, dual-listed in New York and Toronto, were up more than 13 per cent after Bloomberg reported the talks, giving the company a market capitalisation of about $15 billion. Agrium’s stock rose 7 per cent, giving the group an equity value of about $13 billion.
News about a possible deal also lifted the share prices of rival fertiliser producers, such as Mosaic and Intrepid Potash, as a deal might lead to further consolidation in the sector.
Fertiliser companies including PotashCorp and Agrium are struggling with industry overcapacity, although some producers hope a series of mine closures and suspensions over recent years will stabilise the industry.
– (Copyright The Financial Times Limited 2016)
