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Agrium Inc.’s last chief executive officer loved to buy. The new CEO is open to selling assets – and one that could end up on the market is the fertilizer company’s phosphate production operation.
In his first months on the job, Chuck Magro has made a point of saying his main priority is to “optimize” the businesses that his very acquisitive predecessor, Mike Wilson, made in his 10 years in the role. Mr. Wilson, say deal makers who know him, liked to be in everything.
Calgary-based Agrium now owns facilities producing the three big crop nutrients – potash, nitrogen and phosphate – as well as a big retail network that can sell those products and more to farmers.
Mr. Magro is not so sure the company has to be everywhere. The retail business and the North American nitrogen business are as big as anybody’s in their respective games. The potash business is relatively small, but it has advantages such as as a low cost base. Phosphate is a tougher question, Mr. Magro said in an interview in Toronto.
“For me, it’s a ‘Where can we win?’ question,” Mr. Magro said. He likes the nitrogen business “a lot,” and potash “has a lot of competitive advantages, and so I’m very comfortable with where we are with potash.”
For phosphate, the future is less clear. The division, worth somewhere in the neighbourhood of $1-billion by one estimate, is simply not big enough to move the needle at Agrium.
“We have to decide as a company whether we grow that business or whether we do something else with it,” he said. “I’m not married to the three nutrients whatsoever. My goal is very clear: to increase overall value. We’re not going to stay in three nutrients because we feel we need to stay. We’re only going to stay in three nutrients if it creates value.”
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