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Potash (POT) and Agrium (AGU) Shares Soar on Merger Talks
According to Bloomberg, Agrium Inc. and Potash Corporation of Saskatchewan Inc. are engaged in discussions about merging together. People familiar with the matter say that the consolidation could be announced as early as next week. These individuals also say that the deal has not been finalized, so there is still a possibility of the deal not going through. Shortly after the news leaked, Agrium has acknowledged that it is in preliminary discussions with Potash regarding a potential merger.
Today, shares of POT and AGU are up by 13.4% and 8% respectively. Trading for both companies has been halted on the Toronto Stock Exchange following the report on merger talks. If a merger takes place, both agricultural companies could be better off over the long run, as they could experience significant cost and strategic synergies.
The result of the combination stands to also diversify revenue sources for both companies. This could be especially important for Potash, as the fertilizer giant’s stock has become the victim of low crop prices which has put spending pressure on farmers. Agrium has retail stores which it uses to sell agricultural products and services. Like Potash, the company also engages in producing fertilizer and nutrients for crops.
Agricultural stocks in general have been facing pressure recently, so if you’re looking for ways to play the agricultural crash, take a look at some recommendations from our stock strategists Tracey Ryniec and Jeremy Mullin.