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Global potash and fertilizer leader Nutrien will sell its 28-percent stake in Arab Potash to China’s SDIC.
Global potash and fertilizer leader Nutrien (TSX:NTR) will sell its 28-percent stake in Arab Potash to China’s SDIC. The sale, announced on Monday (July 23) morning, will bring in US$502 million for Nutrien in exchange for 23,294,614 common shares.
The Canadian fertilizer producer was required to sell its stake in Arab Potash to obtain approval from the Competition Commission of India and the Ministry of Commerce in China for the Agrium and PotashCorp merger.
The consolidation, which was first announced earlier this year, brought together the two companies to form Nutrien, the largest potash producer in the world. The newly formed Nutrien produces and distributes over 26 million tonnes of potash, nitrogen and phosphate products world-wide.
“The agreement is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by the fourth quarter of this year,” notes the Nutrien announcement.
Once the deal is closed, SDIC will own all of Nutriens’ shares in Arab Potash and will become the majority stakeholder in the company.
China is the largest global consumer of potash, a valuable mineral needed in agriculture. The purchase of Nutriens’ stake will give China more independence in terms of potash supply, making the country less reliant on imports of the vital fertilizer.
Arab Potash is the eighth largest potash producer by volume, primarily harvesting minerals from the Dead Sea.
It has been a busy summer for Nutrien, which in addition to the SDIC deal, announced its intentions to acquire Agrible for C$63 million. Agrible is a digital agriculture company with an advanced platform and product offering, which includes a broad set of agronomic and on-farm advisory tools.
This wasn’t the only technology-focused purchase Nutrien made in July. Earlier in the month, the company also entered into a definitive agreement to acquire Waypoint Analytical and its operating subsidiaries.
Waypoint is the largest agriculture laboratory group in the US, analyzing approximately 1.8 million soil samples for the agricultural sector annually. Prior to the deal, Nutrien had been a longstanding client of Waypoint.
Nutrien’s share price took a slight tumble Monday, declining 0.38 percent to C$68.59 at 2:50 p.m. EST.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.