An Update on the PotashCorp and Agrium Merger

On September 7, 2017, PotashCorp (POT) and Agrium (AGU) provided an update on the status of their merger. The merger was initiated almost a year ago in September 2016. It should be completed by the end of 4Q17. Before we delve into the updates, let’s take a quick look at the proposed merger.

Fertilizer industry players like PotashCorp (POT), Agrium (AGU), CF Industries (CF), and Mosaic (MOS) are facing a slump due to poor price realization for fertilizer products. Investors were hoping that the industry would come out of the slump this year, which didn’t happen. Companies continued to deliver poor performances. CVR Partners (UAN) emerging as the biggest loser with a YTD (year-to-date) loss of 52% as of September 7, 2017.

In the above chart, you can see that PotashCorp and Agrium have underperformed the VanEck Vectors Agribusiness ETF (MOO) and the S&P 500 Index (SPY).

To learn more, read The State of Fertilizer: Your End-of-August Outlook.

These negative situations have pushed the industry towards consolidation. We saw a few major companies announce mergers. Monsanto (MON) announced a merger with Bayer, while Dow Chemical (DOW) is merging with E.I. du Pont de Nemours (DD).

The merger between PotashCorp and Agrium was announced as a merger of equals. Both companies will become one under the new name “Nutrien.”

In this series, we’ll discuss the updates on September 7 related to the PotashCorp and Agrium merger.