The motivation is quite simple as potash prices have gone from $900 U.S. a tonne in 2008 to $273 a year ago, to $154 a tonne last quarter.
Monday morning, news Potash Corp and Agrium merging in a deal that will create an agriculture giant worth $36 billion U.S. as the Saskatoon and Calgary based companies respectively plan to merge.
The opportunity is with PotashCorp having their extensive mining operations and Agrium with the global retail network and now the combined Canadian company will have 20,000 employees in 18 countries.
Like any other merger as of late, it’s all about cost cutting as its getting more and more difficult to grow the top line – especially amidst depressed commodity prices – as companies look to cut costs in order to grow profit.
Synergies estimated to be a quarter of a billion in the first year, up to half a billion a year one year out and going forward.