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Agrium/PotashCorp merger set for shareholder approval

Toronto/Winnipeg | Reuters — The shareholders of Agrium and PotashCorp are set to overwhelmingly approve a merger of the two Canadian fertilizer producers, according to a source familiar with the situation, despite initial skepticism from Agrium investors.

About 99 per cent of the votes from both groups of shareholders are in favour of the transaction, said the source, who spoke on condition of anonymity as the matter is not public. About half of the votes have come in, the source said.

The merger requires two-thirds support of votes cast by shareholders of each company.

On Nov. 3, shareholders of Agrium and Potash will vote in separate meetings in Calgary and Saskatoon, respectively, to approve the deal.

Last month, PotashCorp and Agrium agreed to join forces in an all-stock deal that will allow Potash shareholders to own 52 per cent of the new company, with the rest going to Agrium shareholders.

Some Agrium investors said at the time they were uneasy about the deal because it would give them greater exposure to the slumping crop nutrient potash. Agrium shares fell when the deal was announced.

PotashCorp CEO Jochen Tilk said on Thursday that early votes were “overwhelmingly in favour of the merger.”

Investor advisory firms Institutional Shareholder Services and Glass Lewis are supporting the merger.

The deal, combining the world’s largest fertilizer capacity of PotashCorp with Agrium’s farm retail business, the biggest in North America, still faces regulatory scrutiny in Canada and the U.S. Closing is expected in mid-2017.

In North America, the new company will control about two-thirds of potash capacity and nearly one-third of phosphate and nitrogen capacity.

PotashCorp on Thursday reported a lower third-quarter net income at $81 million, or 10 cents per share, down from $282 million, or 34 cents, a year earlier. It was the second smallest profit per share in nearly 12 years, according to Thomson Reuters data.

Sales dropped 26 per cent to $1.14 billion, but beat the average analyst estimate of $1.04 billion, according to Thomson Reuters I/B/E/S.

PotashCorp’s average realized price for potash in the quarter was $150 per tonne, down from $250 a year earlier. Its potash sales volumes rose 16 per cent to a record 2.5 million tonnes, as shipments resumed to Chinese and Indian buyers.

The company also cut the upper end of its full-year earnings forecast to 45 cents per share, from 55 cents. The company retained the lower end at 40 cents.

Reporting for Reuters by John Tilak in Toronto and Rod Nickel in Winnipeg.

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