Agrium, Potash Corp investors back merger of fertilizer companies

Thu Nov 3, 2016 4:11pm EDT
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By Nia Williams and Rod Nickel

CALGARY, Alberta/WINNIPEG, Manitoba (Reuters) - Shareholders of Agrium Inc (AGU.TO: Quote) and Potash Corp of Saskatchewan Inc (POT.TO: Quote) overwhelmingly approved an all-stock merger of the fertilizer producers on Thursday, shifting the focus to U.S. and Canadian regulators.

More than 99 percent of Potash investors and 98 percent of Agrium shareholders voted in favor of the deal, the companies said at separate meetings in Saskatoon, Saskatchewan, and Calgary, Alberta, respectively. Reuters reported last month that shareholders were likely to give overwhelming backing for the deal.

The deal required two-thirds' support of votes cast by each company's investors to proceed.

Crop nutrient producers are struggling with falling prices and profits, as supplies are ample and farm incomes are strained by weaker crop values.

Potash sought to diversify with Agrium's farm retail network, while Agrium management worked to address investor concerns that the deal exposed them further to low potash prices.

"The expectation (is) the combined entity will have greater leverage and upside participation in a potash price recovery," said Brad Allen, director of Branav Shareholder Advisory Services, which advises companies on corporate governance issues. "It will take time to validate that optimism, and cost synergy rationales extolled in press releases are often not fully achieved."

The companies agreed in September to merge into a new company, of which Potash investors would own 52 percent.

In North America, the merged company would control two-thirds of potash capacity and nearly one-third of phosphate and nitrogen capacity. The tie-up is expected to close in mid-2017, if it clears regulatory scrutiny.   Continued...

President and CEO Chuck Magro of Agrium addresses shareholders during the company's annual general meeting in Calgary, Alberta, May 6, 2015. REUTERS/Todd Korol