Potash Corp sees merger support; profit drops less than expected
By Rod Nickel and Ismail Shakil
(Reuters) - Potash Corp of Saskatchewan (POT.TO: Quote)(POT.N: Quote), the world's biggest fertilizer company by capacity, said early votes by shareholders supported a proposed merger with rival Agrium Inc (AGU.TO: Quote) as it posted a smaller-than-expected drop in quarterly profit.
The Canadian company on Thursday also lowered its profit outlook for the year, warning that significant recovery in the potash market would happen only late this year or in early 2017.
Potash Corp in September agreed to combine with Agrium to navigate a severe industry slump by boosting efficiency and cutting costs. Potash prices dropped to decade lows this year due to excessive mining capacity and weak crop prices.
"Support expressed by shareholders has been very encouraging, with early vote results overwhelmingly in favor of the merger," Potash Chief Executive Officer Jochen Tilk said.
Shareholders of each company will meet separately on Nov. 3 to complete voting.
Potash shares rose 1.1 percent to $16.96 in New York and have gained nearly 8 percent in the past 10 days.
"Investors know the macro backdrop is negative for the potash sector and there are very low expectations. From this point, it really is all about the upcoming merger with Agrium," said Michael Underhill, chief investment officer of Capital Innovations LLC.
Capital Innovations will vote its shares in both companies for the merger because it provides scale and diversification to weather a slumping market, Underhill said. Continued...