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Will The TBA Fertilizer Company Ever Exist?

Summary

Potash Corp. and Agrium officially announced a merger agreement.

The merger of equals will provide tons of benefits to shareholders including a dominant market position in crop inputs and $500 million in synergies.

An investment in the merger deal assumes regulators will approve the top two players in the fertilizer segment forming a dominant industry player.

In a time period when numerous large scale mergers have been blocked by government regulators, the decision of Potash Corp. (NYSE:POT) and Agrium (NYSE:AGU) to go forward with a merger is interesting. Even more interesting is that a large amount of the merger presentation appeared to highlight the very benefit as having the largest scale by far in the crop input segment.

Both Potash and Agrium are down on the news and off meaningfully from the original news of a proposed merger. Lots of questions will emerge on whether the deal is worth the risks highlighted in my original research on the merger.

The proposed deal is a merger of equals with Potash owning 52% of the new company in an all-stock...


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