PotashCorp and Agrium in merger talks

CANADIAN agriculture rivals PotashCorp and Agrium have confirmed they are in preliminary talks to create a potential merger of equals.

Business media estimates the deal could be worth around US$25bn–30bn.

“No decision has been made as to whether to proceed with such a combination, no agreement has been reached, and there can be no assurance that any transaction will result from these discussions,” both companies said in a short statement.

Bloomberg News reported sources that said talks were advancing and a deal could be announced as early as next week.

PotashCorp is currently the largest potash producer and one of the largest nitrogen and phosphate producers. A deal with Agrium would add over 9m t/y to PotashCorp’s total production capacity, thereby solidifying its position.

Such a deal would come under antitrust scrutiny from US and Canadian regulators as a combined company would control 62% potash, 30% phosphate and 29% of nitrogen capacities in the North American market, National Bank of Canada analyst Greg Colman told Reuters.

The move comes after PotashCorp abandoned its US$7.8bn bid for German fertiliser rival K+S in October last year.

These latest talks line up with agricultural businesses negotiating mergers due to a fall in crop prices. Dow and DuPont are working toward a US$130bn megamerger, agreed in December 2015; in February ChemChina agreed to buy Syngenta for US$43bn; and Bayer and Monsanto are in continuing talks over a potential deal.