Agrium And PotashCorp To Merge

(RTTNews) - Agrium Inc. (AGU.TO, AGU) and Potash Corporation of Saskatchewan Inc. (POT.TO, POT) announced they have agreed to combine in a merger of equals. 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. Upon closing of the deal, Jochen Tilk will serve as Executive Chairman, Chuck Magro will serve as CEO, and Wayne Brownlee will serve as CFO.

Under the agreement, a new parent company 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 new company will be a leader in the fertilizer industry with close to 20,000 employees, operations and investments in 18 countries, and a pro forma enterprise value of $36 billion. On a 2015 pro forma basis, the new company would have had net revenue of approximately $20.6 billion and EBITDA of $4.7 billion before synergies.

The combination is expected to generate up to $500 million of annual operating synergies. The new company is expected to achieve approximately $250 million of the synergies by the end of the first year after closing with the full run-rate achieved by the end of the second year. The transaction is expected to be accretive for both sets of shareholders with run-rate synergies.

Both companies expect to maintain their existing dividend payments until the transaction is completed. The new company expects to establish a dividend payment equal to the current Agrium level, adjusted for the new share count.