Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Investor advisory company Institutional Shareholder Services (ISS) has told shareholders of Canada’s Potash Corp. of Saskatchewan (TSX:POT) (NYSE: POT), the world’s largest producer of the fertilizer by capacity, and smaller rival Agrium (TSX:AGU) (NYSE: AGU), to support a merger of the companies.
The note, sent to ISS clients on Friday and shared with the media on Monday, says the all-share business combination would create a firm with significant leverage, it says.
Deal would create the world’s largest crop-nutrient supplier, worth about $36 billion.
The deal, the biggest Canadian merger since CNOOC Ltd. bought Nexen Energy ULC in 2013, will give Potash Corp. shareholders 52% of the new company, which has yet to be named, while Agrium investors will hold the rest.
The combination would create the world’s largest crop-nutrient supplier worth about $36 billion, including debt. Such firm will have nearly 20,000 employees and it is expected to generate up to $500 million of annual operating synergies, according to a new website created by Potash Corp and Agrium, which first revealed they were in preliminary discussions in August.
Last year, PotashCorp’s $8.8bn offer to buy German producer K+S, was rebuffed as the two failed to reach an agreement on price. The failed deal would have allowed PotashCorp to fuse with another of the top-five producers, giving the Canadian group control of about one-quarter of global supply.
