Potash Corporation of Saskatchewan Inc. POT and Agrium Inc. AGU have received the regulatory approval required to close their proposed merger of equals transaction from the United States' Federal Trade Commission (FTC).
The transaction is subject to customary closing conditions is expected to close effective Jan 1, 2018. The FTC approval provides a final clearance for the merger involving two industry leaders.
In September 2016, both companies agreed to merge their businesses to create a fertilizer powerhouse with a pro-forma enterprise value of $36 billion. The merger will create the world’s largest crop nutrient supplier and the integrated company will be better positioned to counter headwinds in the crop nutrient markets.
In June 2017, Potash Corp and Agrium announced that post the completion of their proposed merger transaction, the combined entity will be called Nutrien.
The common shares of Nutrien are expected to start trading on the Toronto Stock Exchange and the New York Stock Exchange under the ticker symbol "NTR" at the opening of market on Jan 2, 2018. Meanwhile, trading of the common shares of Agrium and Potash Corp is expected to be suspended at the opening of market on Jan 2 and the shares will be delisted at the close of market on the same date.
The combined company will be able to serve customers and growers better with low-cost, high-value products and services and complementary assets. It will also have the lowest-cost potash production assets and reserves in North America, a balanced portfolio of nutrients and a leading retail distribution platform.
It will play a critical role in "Feeding the Future" initiative, by acting as the largest global provider of crop services and inputs and help growers to increase sustainable food production.
Moreover, the new company will have a strong balance sheet with considerable cash flows, providing it ample flexibility to return excess capital to shareholders and invest in growth while retaining a strong investment grade credit rating profile.
Potash Corp’s shares have moved up 26.6% in the last six months underperforming the industry’s 33% growth.
Potash Corporation of Saskatchewan Inc. Price and Consensus | Potash Corporation of Saskatchewan Inc. Quote
Zacks Rank & Stocks to Consider
Potash Corp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO and Koppers Holding Inc. KOP, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kronos Worldwide has expected long-term earnings growth of 5%. Its shares have skyrocketed 118.5% year to date.
Koppers has expected long-term earnings growth of 18%. Shares of the company have rallied 25.4% year to date.
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