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UPDATE 1-ISS recommends investors back Agrium-Potash Corp merger

Published 2016-10-17, 01:32 p/m
© Reuters.  UPDATE 1-ISS recommends investors back Agrium-Potash Corp merger
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(Adds details of recommendation, vote)

Oct 17 (Reuters) - Investor advisory company Institutional Shareholder Services (ISS) has recommended that investors in fertilizer producers Agrium Inc AGU.TO and Potash Corp of Saskatchewan POT.TO support a merger of the companies.

The decision was distributed to ISS clients on Friday and sent to media on Monday. The combination would create a company with significant leverage, ISS wrote in its report.

The $26-billion all-stock deal combines Potash's crop nutrient production capacity, the world's largest, with Agrium's farm retail network, North America's biggest.

For Agrium investors, concerns that they would become more exposed to slumping potash prices are mitigated by the expected $500 million in savings from the tie-up, ISS said. For Potash shareholders, the deal offers an attractive chance to diversify with Agrium's farm retail network, the advisory company said.

Potash executives would collect payments of $24.7 million and Agrium executives would get $20.4 million to compensate them for a change in control of the companies, ISS said.

Agrium shareholders will meet to vote in Calgary, Alberta on Nov. 3, while Potash investors meet the same day in Saskatoon, Saskatchewan. Potash shareholders would own 52 percent of the new company.

The deal, which requires two-thirds approval by shareholders of each company, is expected to be completed by mid-2017, pending regulator review.

U.S.-listed shares of both companies dropped about 1.4 percent.

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