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Potash Corp & Agrium Merger Gets Regulatory Nod in India

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Potash Corporation of Saskatchewan Inc. (POT - Free Report) and Agrium Inc. (AGU - Free Report) said that they have secured regulatory approval in India for their proposed merger of equals.

The companies noted that an appellate court in India has cleared a settlement between the merger parties and the Competition Commission of India (CCI) and has also directed the CCI to issue a clearance order.

The approval of the CCI is conditional on Potash Corp. divesting its minority shareholdings in Arab Potash Company, Israel Chemicals, Ltd. and Sociedad Quimica y Minera de Chile S.A. within 18 months from the issue of the order.

Both companies have previously obtained unconditional clearance for the merger in Canada, Russia and Brazil. At present, approval and regulatory review process is underway in the United States and China. The companies expect the transaction to close by the end of fourth-quarter 2017.

In June, Potash Corp. and Agrium announced that once their proposed merger transaction completes, the combined entity will be called Nutrien.  It will play a critical role in "Feeding the Future" initiative, by acting as the largest global provider of crop services and inputs and help growers to increase sustainable food production.

Shares of Potash Corp. have moved up 18.7% over a year, underperforming the industry’s 23.4% gain.


 

Potash Corp., in second-quarter 2017 earnings call, announced that it expects full-year 2017 earnings in the range of 45-65 cents per share that includes merger related charges of 6 cents. The company also revised total potash sales volume guidance and now expects sales in the range of 9-9.4 million tons (up from 8.9-9.4 million tons) in 2017.

Potash Corp. saw healthy demand for potash in the second quarter and expects consistent customer engagement through the remainder of 2017, supported by healthy consumption trends. The company expects strong consumption in China in the second half of 2017 driven by higher crop acreage and nutrient affordability.

However, Potash Corp. remains exposed to a weak pricing environment. The company saw lower pricing across its nitrogen and phosphate businesses in the last reported quarter. Challenging market fundamentals and weak pricing continue to hurt profitability in the company’s phosphate business. Nitrogen pricing environment is also expected to remain challenging through the balance of 2017 as the global markets continue to adapt to considerable capacity increase.

Potash Corp. currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the basic materials space include Huntsman Corporation (HUN - Free Report) and FMC Corporation (FMC - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has expected long-term earnings growth of 7%.

FMC has expected earnings growth of 11.3% for the current year.

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