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Potash And Agrium Shareholders To Take Merger Vote Thursday

Potash And Agrium Shareholders To Take Merger Vote Thursday

The grand merger in the agri-input space is well and truly on. Agrium Inc. (USA) (NYSE: AGU) and Potash Corporation of Saskatchewan (USA) (NYSE: POT) will take their deal one step closer to consummation when their respective shareholders vote on the transaction Thursday.

On September 12, Agrium and PotashCorp. announced a merger of equals, creating an integrated global supplier of crop inputs. The release said a parent company will be formed to own both companies, with Potash Corp. shareholders receiving 0.400 common shares in the new company for each share they hold in Potash Corp., while Agrium shareholders will receive 2.230 shares for each common share of Agrium they own.

A special meeting of Agrium security holders is scheduled for 3 p.m. EST Thursday in Calgary, Alberta.

Meanwhile, Potash Corp. special meeting of shareholders is also due Thursday at 3 p.m. EST.

The deal talks surfaced on October 30, when both companies confirmed that they were in preliminary talks concerning a merger of equals, although they added the statutory warning that the talks may not culminate in a deal.

Earlier in the day, a Bloomberg report said a deal between Agrium and Postash Cor. is in the works.

The quest to combine followed a downward spiral in fertilizer prices. A combination will bring in scale advantage and provide leeway for cost cuts. The proposed deal is also expected to scale the regulatory hurdles without many hiccups, with both companies being Canadian.

A day after the merger rumor broke out, Fitch ratings said in a report, "Valuations of fertilizer and agricultural chemicals companies have declined following four years of bumper crops and high stocks, which have reduced farm economics and prices for farm inputs.

"Potential merger synergies for fertilizer producers include maximizing unit profit across a bigger operating base, optimizing working capital and capital spending, and optimizing logistics. The addition of strong retail operations provides timely market intelligence and ability to optimize working capital throughout the value chain."

At the time of writing, Agrium shares were up 0.85 percent at $91.31, while Potash Corp. shares rallied 1.44 percent to $16.24.


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