The new year will bring a new symbol to the Toronto and New York stock exchanges: NTR, for Nutrien, the latest example of consolidation in agriculture.
The companies getting together are Potash Corporation of Saskatchewan Inc. and Agrium Inc., which announced today they have received approval from the U.S. Federal Trade Commission, the final regulatory piece needed, which will allow the transaction to close on Jan. 1.
The FTC imposed conditions on its approval, however. "To remedy competition concerns arising from the proposed merger, under the terms of the settlement with the FTC, PotashCorp and Agrium will divest two of Agrium’s U.S. facilities and related assets," the FTC said in a release. Agrium’s Conda, Idaho, (superphosphoric acid) facility will be divested to Itafos; and its North Bend, Ohio nitric acid facility will be divested to Trammo."
Without that shedding of assets, "the merger would eliminate head-to-head competition between PotashCorp and Agrium for sales of SPA, enhance the new firm’s ability and incentive to raise SPA prices, and increase the likelihood of coordination between competitors in the market," the FTC said. "The merger would also eliminate the vigorous competition that exists today between PotashCorp and Agrium for sales of 65-67 percent concentration nitric acid" near and to the east of the parties’ nitric acid plants in Ohio. PotashCorp's facility is in Lima, Ohio.
The “merger of equals” will create the largest crop nutrient company in the world and the third-largest natural resource company in Canada, with an estimated $20.6 billion in annual revenue. “PotashCorp is the largest producer, by capacity, of potash and one of the largest producers of nitrogen and phosphate,” according to a website with information on the merger.
Agrium’s retail-distribution network includes about 1,500 facilities and more than 3,300 crop consultants “who provide advice and products to our grower customers to help them increase their yields and returns on hundreds of different crops,” the website said.
“This final clearance marks a significant milestone in bringing two industry leaders together,” Chuck Magro, President and Chief Executive Officer of Agrium, said in a news release. “Given our extensive integration planning work, we expect to move quickly upon closing to begin delivering on the many strategic benefits and synergy potential of this combination.”
“We are pleased to have received final regulatory clearance and look forward to the formation of Nutrien,” said Jochen Tilk, President and Chief Executive Officer of PotashCorp. “Nutrien will build upon the impressive legacies and best practices of both companies to create long-term value for all our stakeholders.”
The company’s headquarters will be in Sakatoon, where PotashCorp is based, and have a corporate office in Calgary, where Agrium is located.
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