Sask. Premier Brad Wall confident about PotashCorp-Agrium merger talks

Premier Brad Wall believes a potential merger of PotashCorp and Agrium could benefit Saskatchewan.

In separate news releases issued Tuesday morning, PotashCorp and Agrium said they were in talks "regarding a merger of equals," but stressed that no agreement had yet been reached, and there were no guarantees a deal would be reached.

If the merger goes ahead, Wall believes it would benefit the province.

"We would want to see Saskatchewan's interests protected, and furthered, frankly," said Wall. "On the corporate side, Agrium is headquartered in Calgary, We would view this, potentially, if it were to come to fruition, as an opportunity to pursue even greater corporate presence in Saskatchewan as part of a new, merged entity."

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​Wall received calls from the CEOs of both companies this morning, and received assurances that the province was top of mind during merger discussions.

"The interests of Saskatchewan have been at the forefront of even these preliminary discussions," said Wall. "Those interests are jobs, the taxes paid, the economic impact of these companies to Saskatchewan. These considerations have been paramount in preliminary discussions and, should these discussions advance, that they would be a top priority. I was grateful to hear that."

Wall said this situation is not comparable to BHP Billiton's hostile takeover bid of PotashCorp in 2010. That deal was scrapped by the federal government after lobbying from Wall and others in the province.

"It's not a foreign takeover," said Wall. "It would be a merger of two Canadian companies. My understanding is the Investment Canada review process that was triggered by that proposed takeover would not be triggered in this regard. But we would absolutely have an interest at stake. And, as a government, we would want to protect Saskatchewan's interests."

The Toronto Stock Exchange halted trading in both companies' stocks Tuesday morning.

Talks not surprising

A policy expert says it is not surprising that Potash Corporation of Saskatchewan has confirmed it is in discussions with Calgary-based Agrium to merge the two companies.

​"It's an intriguing announcement," said Sylvain Charlebois, a food distribution and policy professor at the University of Dalhousie. "It's not necessarily surprising, given the current climate in the marketplace.".

Charlebois said prices for potash had been depressed for several years. A merger between the two mining and fertilizer companies could be seen as a way to find more efficiencies during tough times.

"Most companies in the industry are struggling to make good profits, compared to a few years ago," he said. "We shouldn't be surprised at companies like Agrium and PotashCorp considering more consolidation."

Charlebois said there didn't seem to be many parallels between these merger talks and BHP Billiton's hostile takeover bid of PotashCorp in 2010. The bid was eventually blocked by the federal government after aggressive lobbying from Premier Brad Wall.

Charlebois doesn't see the same scenario playing out here.

"We were dealing with what I would call an aggressive and quasi-arrogant company in BHP Billiton," he said. "It became very political, and at the end of the day, most people in Saskatchewan wanted the federal government to protect PotashCorp."

While many mergers are associated with layoffs, Charlebois doesn't believe job losses would happen until several years after any potential bid.

"I suspect that governments will actually come out and express their expectations of what a potential deal should look like," he said. "They would probably make sure there are no job losses, at least for the first little while."