What’s new with corporations and mergers? CBC sure has news for this subject leaking news. Potash Corporation of Saskatchewan and Agrium Inc. of Calgary have settled on merging in together in a contract that would generate a global farming giant with an venture value of approximately $36 billion US. Talk about a merger gone right!
The deal would bring together Saskatoon-based Potash Corp’s huge compost mines with Agrium’s extensive global direct-to-farmer retail system to create an agricultural manifestation. The novel firm would be the world’s No. 1 manufacturer of potash and No. 2 manufacturer of nitrogen fertilizer. Operating in 18 countries and more than 20,000 workers internationally.
Vacant Potash shareholders would get 0.4 shares in the new company for every Potash share they own. Agrium shareholders would see their shares converted into 2.23 shares. At those ratios, Potash shareholders would own 52 per cent of the new company, while Agrium owners would hold the other 48 per cent. This deal is anticipated to be completely and ready to go in mid-2017.
The looks of the planned fit and the looks at combining the world’s leading fertilizer with the world’s leading rural retailer are looking significant and successful. When you put two chief things together it creates capital and strength for an economy. Chuck Magro, the CEO of Agrium claims he is full on board with this deal and that it makes so much sense for this merger to occur.
Shares in both stocks with the companies saw increases and leaps in their share prices this September, when talks of unification started to travel.
The planned deal comes as the fertilizer industry fights with a sudden drop in prices in recent years following an increase of production.
PotashCorp accounted an average price of $154 US per tonne compared with higher rates of $273 per tonne a year ago.
But in terms of merger history Forbes has done their research. Studies signify that 83% of merger deals did not advance shareholder returns. This is primarily, because of negligence of risk, price, strategy, cultures, or management capacity.