Potash Corporation of Saskatchewan (USA) (POT) Spikes on Agrium Inc. (AGU) Merger Report

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Canadian fertilizer giant Potash Corporation of Saskatchewan (USA) (NYSE:POT) jumped about 12% about a half an hour after Tuesday’s bell on a report saying it was in talks to merge with Agrium Inc. (USA) (NYSE:AGU). AGU shares followed suit, putting up 8% gains of their own.

Potash Corp. of SaskatchewanA Bloomberg report said people familiar with the matter noted that nothing was final, but if a deal does go through, they believe an announcement could be coming as early as next week.

Potash Corp. investors in particular were surely celebrating amid what has been a lousy few years for the maker of potash, nitrogen and phosphates. POT shares are off more than 70% since a peak in February 2011.

Grating stock holders further was a cut to the stock’s dividend in late January, which came alongside a lowered full-year earnings forecast.

Agrium hasn’t suffered nearly as much, trading mostly rangebound for the past few years. Though a good part of AGU’s hardiness has come from its agricultural retail offerings, which have helped prop up profits. And just a few weeks ago, the company reported a revenue miss on sales that declined more than 8% year-over-year. Pricing concerns also prompted AGU to trim its full-year earnings guidance from $5.25-$6.25 per share to $5-$5.30.

Nonetheless, the overall environment has been less than accommodating to both ag stocks. As Bloomberg points out, “Over the past year, spot potash prices in the U.S. corn belt have fallen 34 percent and other crop nutrients have also gotten cheaper. Potash buyers in India and China have delayed signing contracts for supplies, damping demand.”

Both POT and AGU were in the red year-to-date before Tuesday’s pop in both stocks.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/potash-corporation-saskatchewan-usa-pot-spikes-agrium-inc-agu-merger-talks/.

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