PotashCorp, the world’s largest potash producer, has announced it will be joining with its industry rival, Agrium, in what it has described as a “merger of equals”. The deal, confirmed on September 12, will create a new fertiliser group, valued at around $27bn.
“This is a transformational merger that creates benefits and growth opportunities that neither company could achieve alone”, said Agrium President and CEO, Chuck Magro.
“Combining our complementary assets will enable us to serve our customers more efficiently, deliver significant operating synergies and improve our cash flows to provide capital returns and invest in growth.”
Headquartered in Canada, the new fertiliser company will have over 20,000 employees, and will oversee operations and investments in over 18 countries. While both companies have suffered a significant decline in earnings in the first half of 2016, together they anticipate generating annual revenue of $21bn by 2017.
Together PotashCorp and Agrium anticipate generating annual revenue of $21bn
The multi-billion dollar merger will see the two firms monopolise the global potash market, giving the newly formed crop nutrient group control of 23 percent of worldwide potash production, and 60 percent of North American production.
While the new company has promised to “better serve customers” through offering low-cost potash and nitrogen fertilisers, the merger may exacerbate US farmers’ pre-existing anxieties over reduced competition in the agriculture industry. This year has seen a spate of mergers and acquisitions in the sector, as agriculture suppliers struggle to deal with falling crop prices and a global economic slowdown.
Thus far, ChemChina has acquired Syngenta in a record-breaking $42bn deal, Dow Chemical and Dupont have announced a landmark merger, while Bayer is pressing ahead with its efforts to acquire industry giant Monsanto.
As power in the agriculture industry is increasingly concentrated in the hands of a few key players, the Potash-Agrium deal could come under the scrutiny of antitrust authorities to ensure fertiliser prices remain fair for US farmers.