32 LEXPERT MAGAZINE
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JANUARY/FEBRUARY 2018
1
PotashCorp and Agrium
merge to form Nutrien
is merger of equals was announced by
Potash Corp. of Saskatchewan Inc. and
Agrium Inc. in 2016, when commodity
markets were stagnating, with the antici-
pation of $500 million per annum in cost
savings. e deal closed on January 2, when
the newly merged entity, Nutrien Ltd., be-
gan trading on the TSX and NYSE. Bill
Braithwaite led the team at Stikeman El-
liott LLP, which included Mike Devereux,
for PotashCorp and its General Counsel,
Joe Podwika.
Braithwaite said, "While the deal gave all
of us the opportunity to work on the biggest
true 'merger of equals' in Canadian history,
it also gave the deal team a chance to help
create — essentially like an IPO — a new
western Canada based global giant." Ross
Bentley, who led the team at Blake, Cassels
& Graydon LLP for Agrium, said, "is
transformational business combination has
compelling industrial logic, facilitates the
creation of a true 'Canadian champion' and
will create benefits to the Canadian econo-
my, for customers and employees within the
combined worldwide operational footprint
of Nutrien, and for shareholders as Nutrien
achieves its targeted synergies."
ese two Canadian crop nutrient pro-
ducers, with some differing and some over-
lapping products, are global in scale and
operation. And so the regulatory hurdles
involve several jurisdictions and entities,
including the US, China and India. On
closing, the two merged to create Nutrien,
a manufacturing, wholesale and retail busi-
ness with an enterprise value of $36 billion.
Stocks of both companies rose in the third
quarter of 2017.
Michael Kandev, who led the Tax team
for PotashCorp at Davies Ward Phillips &
Vineberg LLP with Nathan Boidman, elab-
orated: "Conceptually, a merger of equals
can be effected contractually or structur-
ally. e former would see each corporate
group remain legally separate but 'merged'
by contractual agreements including profit
equalization arrangements. A corporate-
structural merger was instead chosen by
PotashCorp and Agrium.
"A corporate merger could be effected
in several ways, but ultimately the parties'
commercial and business objectives were
best reflected in a structure involving the
establishment of a new top holding pub-
licly listed corporation, called Nutrien
Ltd., that would directly and indirectly ac-
quire PotashCorp and Agrium with their
shareholders emerging as shareholders of
Nutrien Ltd.
"As part of the transaction structuring
exercise, we had to provide for several criti-
cal tax considerations that roughly fall into
two categories: ensure that taxable share-
holders defer tax upon participating in the
merger and that the merging corporations
and their executives both defer tax on the
deal and have the best tax and corporate-
structural platform going forward."
e deal closing was pushed to the end
of 2017 to allow Competition regulators
in various jurisdictions to review the deal.
According to the companies' joint press
release: In Canada and the United States,
the parties worked with the Canadian
Competition Bureau and the Federal Trade
Commission to resolve final issues in super-
phosphoric acid (SPA) and nitric acid. e
companies have also been informed that
the Ministry of Commerce (MOFCOM)
in China and, independently, the Compe-
tition Commission of India (CCI) con-
ditioned their respective approvals of the
proposed transaction on the divestment of
certain of PotashCorp's offshore minority
ownership interests.
e remedies under consideration are
not expected to impact the estimated
$500-million of annual operating syner-
gies. As the largest global provider of crop
inputs and services, Nutrien will play a
critical role in 'Feeding the Future' by help-
ing growers to increase food production in
a sustainable manner.
Key Law Firms
PotashCorp: Stikeman Elliott LLP
(M&A, Competition/Regulatory); Davies
Ward Phillips & Vineberg LLP (Canadian
Tax); Jones Day; Alchemy Capital
(US Tax Planning )
Agrium: Blake, Cassels & Graydon LLP
(Canadian M&A and Competition); Paul,
Weiss Riind, Wharton & Garrison LLP
(M&A), Latham & Watkins LLP
(US and Global Antitrust); Felesky Flynn
LLP (Canadian Tax); Osler Hoskin
& Harcourt LLP (US Tax)
Agrium Board of Directors: Norton
Rose Fulbright Canada LLP
2
Cenovus acquires
ConocoPhillips assets
for $17.7 billion
Calgary-based Cenovus Energy Inc. was
"bulking up in a $17.7-billion deal to more
than double its production as the repatria-
tion of Canada's oil sands winnows control
of the resource to a handful of domestic
players," according to e Globe and Mail.
"It would acquire a 50-per-cent inter-
est in the Foster Creek and Christina
Lake oil sands projects owned by partner
ConocoPhillips Co., giving it full control
of the steam-driven bitumen assets in the
biggest oil sands deal to date." To achieve
this, Cenovus issued $3 billion in shares
in a bought deal and took out $10.5 bil-
lion in loans. It also announced it was "jet-
tisoning production equivalent to 47,600
barrels a day (b/d), with proceeds aimed
at repaying debt."
According to Globe reports, the deal
can be viewed in this context: "e global
energ y companies, hit by high debt levels
during the downturn, have also been frus-
trated by high costs, low Canadian crude
margins and delays over major pipeline
projects billed as key to bolstering eco-
nomics in the region."
Jeff Bakker from Blakes, co-counsel to
Cenovus Energy Inc., told Lexpert: "is
was a transformational acquisition for
Cenovus Energy Inc. and was the largest
energy asset acquisition ever undertaken
in Canada. e aforementioned acquisi-
tion bridge facilities were one of the largest
bridge facilities ever placed in the Canadian
lending market."
Janice Buckingham, of Osler, Hoskin
& Harcourt LLP, counsel to ConocoPhil-
lips, said this "strategic sale to Cenovus was
significant not only in terms of absolute
dollar value, at $17.7 billion, but in terms
of maximizing value in a low-price environ-
ment. is was achieved by combining cash
consideration with share consideration and
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