Agrium Inc. (TSX:AGU) and Potash Corporation of Saskatchewan Inc. (TSX:POT) have cleared another hurdle in the merger of the two companies.
The companies announced Tuesday they have received regulatory approval from China with conditions.
Saskatoon-based PotashCorp is required to divest its minority shareholdings in Arab Potash Company and Sociedad Quimica y Minera de Chile S.A. within 18 months and in Israel Chemicals Ltd. within 9 months from the closing of the merger transaction.
PotashCorp is also required to convert its equity interest in Sinofert Holdings Limited to a passive investment prior to the closing of the merger.
The companies are also required to ensure that Canpotex – which manages potash exports for PotashCorp, Agrium and Mosaic – remains a stable, dedicated and reliable supplier to China.
Agrium also announced it has sold two American assets to help win U.S. Federal Trade Commission approval of the merger.
The Calgary-based fertilizer and farm services company says it has agreed to sell its Conda, Idaho, phosphate production facility and nearby mineral rights for about US$100 million, including working capital, to Toronto-based Itafos (TSXV:IFOS).
It says it is also selling its North Bend, Ohio, nitric acid facility to a subsidiary of New York-based Trammo Inc. for an undisclosed amount.
Agrium CEO Chuck Magro says the sales will “pave the way” to complete the friendly merger with PotashCorp, expected to deliver $500 million in annual cost savings.
In September, the companies said their deal to create a combined company called Nutrien worth about US$36 billion would close several months later than expected due to competition concerns raised by regulatory bodies in Canada, the U.S., China and India.
Agrium said it will record an after-tax non-cash impairment of $178 million on the sale of the Conda plant, which represents its exit from the superphosphoric acid business in North America.
It said it has signed a long-term agreement with Itafos to supply all of the ammonia the plant needs and buy all of the monoammonium phosphate produced.
Agrium and PotashCorp expect to close the transaction and merge the companies by the end of the fourth quarter of 2017.
With files from The Canadian Press
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