Agrium-Potash merger

On 12 September, the CEOs of Potash Corporation headquartered in Regina, and Agrium, the large agricultural retailer based in Calgary,  confirmed the rumour circulating for over a week that their boards had agreed to a friendly merger. This is the second large corporate transaction affecting a large Alberta corporation in the past week.

The combination will vault the company into a position of greater market power as other large agricultural or chemical companies in developed countries look for potential partners or have clinched deals recently to strengthen their market position (pricing power).  The merger is generally seen by market analysts as defensive during a period where prices for potash and other agricultural products are low.

While there will be some competition law concerns, it is likely that the merger will be consummated with some divestment occurring.  Premier Wall of Saskatchewan has been supportive and the head office will remain in Regina.  Farmers will be watching the transaction closely and some associations may challenge the tie-up by intervening with the Competition Bureau.

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