Agrium, Potash Report Merger Talks--3rd Update
30 Agosto 2016 - 12:20PM
Noticias Dow Jones
By Tess Stynes
Canadian fertilizer giants Agrium Inc. and Potash Corp. of
Saskatchewan Inc. said they were in preliminary talks about a
possible merger that could form a company with a total market value
of more than $28 billion.
However, the companies also said no decision had been made, and
there is no assurance that the discussions would result in any
potential deal.
Bloomberg News earlier on Tuesday reported that the fertilizer
makers were in advanced merger talks, with a deal announcement
possible as soon as next week.
Shares of both companies jumped on news of the talks. Agrium's
stock rose 5.9% to $94.72 in afternoon trading in New York, while
Potash shares increased 10% to $17.69. Including the gains Tuesday,
Agrium is valued at $13 billion, while Potash has a market value of
nearly $15 billion.
Talk of a potential deal lifted the stocks of other fertilizer
producers. Mosaic Co. shares jumped 9% to $30.46, while CF
Industries Holdings Inc. added 4.6% to $26.13.
Fertilizer producers have been hurt in recent years by depressed
prices for crop nutrients amid a glut of supply and weak demand.
The pressures have weighed on the sector's stocks. Before the gains
Tuesday, Potash shares had fallen 39% over the past year. Agrium
had dropped 14%; Mosaic, 32%; and CF Industries, 57%.
Saskatoon, Saskatchewan-based Potash in July slashed its annual
earnings guidance and cut its quarterly dividend for a second time
this year as it continues to contend with lower prices for potash,
nitrogen and phosphate -- the three key fertilizer nutrients it
produces -- as well as lower sales volume.
In 2015, Potash's earnings dropped 17% to $1.27 billion on sales
that declined 12% to $6.28 billion.
Earlier this month, the Calgary, Alberta-based Agrium also cut
its 2016 earnings guidance, citing weak prices for fertilizer
nutrients. In 2015, Agrium's earnings rose 38% to $988 million,
even as sales fell 7.8% to $14.8 billion
Any potential deal would add to a string of transactions
involving the global farming sector, including the pending merger
of Dow Chemical Co. and DuPont Co., both of which maintain large
seed and crop chemical divisions.
In February, China National Chemical Corp. offered to pay $43
billion deal to acquire Swiss pesticide maker Syngenta AG.
Since May, German pharmaceutical giant Bayer AG, which also
makes seeds and pesticides, has been pursuing a takeover of
Monsanto Co., the world's largest supplier of crop seeds and
genetics. Monsanto has rejected Bayer's proposals several
times.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
August 30, 2016 13:05 ET (17:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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