Pro: Potash-Agrium Merger Might Not Be Great News For Farmers

Potash Corporation of Saskatchewan (USA) (NYSE: POT) confirmed Monday it has agreed to a combine in a merger of equals with Agrium Inc. (USA) (NYSE: AGU).

Jochen Tilk, Potash's president and CEO, said in a statement that the combined entity will "greatly benefit customers and suppliers," among other benefits.

Related Link: Citi Gives Its Take On Potential Potash-Agrium Tie-Up

Agrium President and CEO Chuck Magro also said that the merger will "enable us to serve our customers more efficiently, deliver significant operating synergies and improve our cash flows to provide capital returns and invest in growth."

Benzinga reached out to Angie Setzer, vice president of Grain for Citizens LLC, a full service ag retailer.

Pro's Opinion

According to Setzer, consolidation within the fertilizer segment is "tough" for farmers due to the fact that suppliers and supplies "are limited as is." She added that unlike other mergers in the space, such as equipment makers, it is "very difficult to find a new source of pot ash or other fertilizers."

Setzer also noted that the price of pt ash is "starting to firm up on thoughts of reduced production."

"With steady to increasing demand, a reduced supply will drive costs higher no matter whether the economics of increased inputs costs in the face of falling grain costs make sense," Setzer said.

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