The Potash Corp. of Saskatchewan Inc. and Agrium Inc. merger has won tentative support from Saskatchewan Premier Brad Wall, even as farmers complained that it would reduce competition and increase fertilizer prices.
Mr. Wall, who helped stop Anglo-Australian BHP Billiton’s bid for Potash Corp. in 2010, sees benefits flowing to his province, especially given that the merged company would be headquartered in Saskatoon.
“Here is a chance to solidify two existing companies into one larger Canadian champion headquartered in Saskatoon,” he told reporters. “I am glad we fought the fight we did five or six years ago. Without it … there wouldn’t be a Potash Corp. of Saskatchewan and there wouldn’t be an opportunity to create an even larger, more significant entity headquartered in our province.”
Potash Corp. and Agrium are grappling with weaker fertilizer markets, where a surplus of potash has sent prices down 60 per cent over four years. Both companies have reduced their full-year profit outlook and Potash Corp. has had to cut its dividend twice this year.
A merger would lead to $500-million (U.S.) in annual savings, the companies said. They are targeting four main areas: distribution and retail integration, administration, suppliers and “production optimization.” Mr. Wall could not say whether the executives promised not to cut any jobs in Saskatchewan or keep the mines open.
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