Potash & Agrium merger should pay off

Article Excerpt

Under the terms of the upcoming merger of Potash Corp. and Agrium, POT investors will receive 0.40 of a share in the combined company for each share they hold; Agrium investors will receive 2.23 shares for each of their AGU shares. As a group, Potash Corp. shareholders will then own 52% of the firm, with Agrium investors holding 48%. The new company will pay an annual dividend equal to Agrium’s current rate of $3.50 U.S. a share. That’s a big jump over Potash Corp.’s current dividend of $0.40 U.S. The elimination of overlapping operations will let the combined firm cut $500 million U.S. from its annual costs. Regulators in several countries still need to approve the merger. However, the companies still expect to complete the transaction in mid-2017. Until then, their shares will continue to trade in a narrow range. AGRIUM INC. $125 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 138.2 million; Market cap: $17.3 billion; Price-to-sales ratio: 1.3; Dividend…