Agrium Inc. and Potash Corp. of Saskatchewan Inc. today announced that they have agreed to combine in a merger of equals to create a world-class integrated global supplier of crop inputs.
A new parent company, to be named later, will be formed to own both companies. PotashCorp shareholders will receive 0.400 common shares of the new company for each common share of PotashCorp they own, and Agrium shareholders will receive 2.230 common shares of the new company for each common share of Agrium they own. The exchange ratios represent the exchange ratios of the two companies at market close on the NYSE on August 29, 2016 the last trading day prior to when the companies announced that they were in preliminary discussions regarding a merger of equals, which is consistent with the approximate 10 day and 60 day volume weighted average prices through that date. Following the close of the transaction, PotashCorp shareholders will own approximately 52 percent of the new company, and Agrium shareholders will own approximately 48 percent on a fully diluted basis.
On a 2015 pro forma basis, the new company would have had net revenue of approximately US$20.6 billion and EBITDA of US$4.7 billion before synergies.
The combination is expected to generate up to US$500 million of annual operating synergies primarily from distribution and retail integration, production and SG&A optimization, and procurement.
Upon closing of the transaction, Jochen Tilk will serve as executive chairman, and Chuck Magro will serve as CEO, both reporting to the new board of directors. Wayne Brownlee will serve as CFO, and Steve Douglas will serve as chief integration officer.
The new company will remain committed to Canpotex.
Canadian taxable resident shareholders will be able to elect such that they receive shares in the new company free of Canadian income taxes, and other shareholders will generally not be subject to Canadian income tax. It is expected that U.S. resident shareholders will generally receive shares in the new company on a tax-deferred basis for U.S. federal income tax purposes.
The transaction will be implemented by way of a plan of arrangement under the Canada Business Corporations Act. It is expected to close during mid-2017, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals, Canadian court approval, and approval by the shareholders of both companies.