Potash Corporation of Saskatchewan Inc. POT
and Agrium Inc. AGU
have received the regulatory approval required to close their proposed merger of equals transaction from the United States' Federal Trade Commission (FTC).
The transaction is subject to customary closing conditions is expected to close effective Jan 1, 2018. The FTC approval provides a final clearance for the merger involving two industry leaders.
In September 2016, both companies agreed to merge their businesses to create a fertilizer powerhouse with a pro-forma enterprise value of $36 billion. The merger will create the world’s largest crop nutrient supplier and the integrated company will be better positioned to counter headwinds in the crop nutrient markets.
In June 2017, Potash Corp and Agrium announced that post the completion of their proposed merger transaction, the combined entity will be called Nutrien.
The common shares of Nutrien are expected to start trading on the Toronto Stock Exchange and the New York Stock Exchange under the ticker symbol "NTR" at the opening of market on Jan 2, 2018. Meanwhile, trading of the common shares of Agrium and Potash Corp is expected to be suspended at the opening of market on Jan 2 and the shares will be delisted at the close of market on the same date.
The combined company will be able to serve customers and growers better with low-cost, high-value products and services and complementary assets. It will also have the lowest-cost potash production assets and reserves in North America, a balanced portfolio of nutrients and a leading retail distribution platform.
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.
Moreover, the new company will have a strong balance sheet with considerable cash flows, providing it ample flexibility to return excess capital to shareholders and invest in growth while retaining a strong investment grade credit rating profile.
Potash Corp’s shares have moved up 26.6% in the last six months underperforming the industry
’s 33% growth.
Potash Corp expects strong customer engagement in all key potash markets and strong demand to continue into 2018. For 2017, the company anticipates global shipment at 62-65 million tons, with total shipments in North America to approach higher end of 9.3-9.8 million tons range.
Potash Corp expects nutrient affordability to continue to drive strong consumption in China, while the demand environment in India is improving, supported by favorable monsoon, higher minimum support price and considerable agronomic need.
The company expects nitrogen market to remain volatile in the fourth quarter and market fundamentals are likely to remain challenging for phosphates.
Potash Corp, in October, narrowed full-year 2017 earnings expectations to the range of 48-54 cents per share, which includes merger related charges of 8 cents per share. The company also revised total potash sales volume guidance and now expects sales in the range of 9.1-9.3 million tons (narrowed from 9-9.4 million tons) in 2017. It projects potash gross margin of $750-$800 million for the year.
Potash Corporation of Saskatchewan Inc. Price and Consensus