IMC, Cargill Merge Crop Nutrient Business

IMC Global and agribusiness giant Cargill have signed a definitive agreement to combine their phosphate, potash, and nitrogen assets to create the second largest global fertilizer operation, with $4.1 billion in annual sales.

When the deal closes later this summer—subject to regulatory approval—the new, as-yet-unnamed publicly owned company will be larger than number three Potash Corp. of Saskatchawan, with estimated annual sales of $2.6 billion. Number one Yara, the Norsk Hydro fertilizer business to be spun off to shareholders later this year, has sales of about $4.9 billion.

In return for two-thirds of the new firm’s shares, Cargill is to contribute its fertilizer operations with $2 billion in sales and $50 million in debt. IMC turns over a business with $2.1 billion in sales and $2.1 billion in debt. IMC shareholders will own one-third of the new firm, which is to be headed by Fritz Corrigan, now Cargill executive vice president.

For IMC, the merger means allying with a strong partner after years of losses caused by industry overcapacity and a farm recession. Executives say the fertilizer industry is poised for a recovery.

For Cargill, the largest U.S. privately held firm, the deal means enlarging its position in fertilizers at the expense of going public—the first time an operation of the secretive family-owned business will be open to public scrutiny.