Sep 15, 2016
Top PotashCorp shareholder calls deal 'win-win-win' for Canada
As investors weigh the pros and cons of Potash Corporation of Saskatchewan’s proposed merger with Agrium, one of PotashCorp’s biggest shareholders is speaking out. Montreal-based investment firm Jarislowsky Fraser argued on BNN the deal is a winner for both companies -- and for Canada.
“Our view on this transaction is that it’s actually a win-win-win situation,” said Charles Nadim, a partner and portfolio manager with Jarislowsky Fraser, in an interview with BNN. “It’s a win for Agrium, it’s a win for Potash, and it’s a big win for Canada.”
Shares of both companies have declined since the deal was announced, with Agrium’s stock declining by a greater percentage. While some reports have speculated large Agrium investors will not back the deal, Nadim’s comments represent the strongest voice in support of the deal.
Jarislowsky Fraser, a firm with $36 billion in assets under management, holds more than 15 million PotashCorp shares, making it one of the company’s top 10 largest shareholders. In 2010, the firm’s founder, billionaire Stephen Jarislowsky, spoke out against BHP Billiton’s proposed takeover of PotashCorp, telling The Globe and Mail, “I think that we should not lose all our companies. We can’t even buy a decent portfolio in Canadian stocks anymore.”
PotashCorp and Agrium have championed their deal as a homegrown powerhouse, leading some to believe the merger will face less regulatory scrutiny in Canada.
Nadim said that he met earlier this week with both companies in Montreal, as PotashCorp and Agrium make their case for the transaction to top shareholders. He noted the proposed $500 million in cost savings from the deal is one of the most attractive attributes of the merger and he does not expect job losses to be part of those cost savings. Nadim noted Jarislowsky Fraser reduced its stake in PotashCorp last year, but began buying stock again this year on the belief that industry pricing may have bottomed out. Nadim also told BNN he thinks it’s unlikely a rival bid will materialize.
If the deal goes through, PotashCorp shareholders will control 52 per cent of the combined company. The deal requires approval from two thirds of shareholders from both PotashCorp and Agrium. Jarislowsky Fraser does not own Agrium shares.
