Canadian PotashCorp is looking for a buyer of its shares in Arab Potash Company (APC), which it is forced to sell as part of a merger agreement, said the company’s President and CEO Brent Heimann.
Last year, Potash Corp and Agrium, another potash and fertilizer producer based in Canada, decided on a merger and as part of the process they needed regulatory approval in some of the countries where both of them largely operate, including Canada, the United States, India, China and Brazil.
The companies received unconditional clearance for the merger in Canada, Brazil and Russia. And while the merger still needs the approval of the US and Chinese governments, India declined to approve this move unless PotashCorp agrees to sell its shares in three companies: APC in JordPotashan, ICL in Israel, and SQM in Chile.
“PotashCorp is very happy with its investment in APC and does not want to sell its shares in the company. However, they are forced to as the result of a merger,” Heimann told Venture.
Although the company took its case to the appeal court in India, it was unsuccessful in getting the Indian regulators to reduce this claim. However, they did manage to buy more time, as originally the Indian regulators wanted them to sell those shares before the merger could go through. The two companies are set to merge on December 31, but the appeal gave them 18 months to sell these shares rather than by the end of the year.
According to Heimann, the total value of these assets in these three companies is about $6 billion, and with today’s APC’s stock price in the Amman Stock Exchange at around JD17 per share, that would put Potash Corp’s value at somewhere over JD400 million.
What does this mean for the APC? “We are hoping that PotashCorp can find a strategic partner who can come in and work closely with the people of Jordan and move the company forward,” said Heimann, adding that no offers have been received yet. “At the same time we’ve also been able to really improve the talent of the local staff here so that people are ready to carry on some of the things that we’ve started.”
The new merged company will be called Nutirien and it will become the largest crop nutrient (fertilizer) company in the world.
The APC is a successful privatization attempt that has resulted in the government receiving JD374 million in royalties and JD335 million in dividends since 2004.