Potash Corp.’s Mooted Merger Could Face Tough Regulatory Hurdles

Potash Corp. of Saskatchewan Inc.’s bid for rival fertilizer producer K+S AG could face tough regulatory hurdles as more than half of global capacity would end up in the hands of four companies, according to Bloomberg Intelligence.

The proposed $8.6 billion-plus takeover of K+S would give about 8 percent of global capacity to Saskatoon, Saskatchewan-based Potash Corp., which already controls about 20 percent of the market, according to Bloomberg Intelligence.

Potash Corp. also is part of Canpotex Ltd., a marketing venture with North American fertilizer suppliers Mosaic Co. and Agrium Inc. Collectively Canpotex has 37 percent of global capacity right now, according to a Bloomberg Intelligence note.

The possibility of further consolidation in the industry would increase the likelihood of antitrust challenges, Bloomberg Intelligence said.

“It’s natural resources; the government always takes a look at it,” Christopher Perrella, an analyst for Bloomberg Intelligence, said Friday by phone.

The U.S. corn seed market, where four suppliers comprise two-thirds of the industry, puts things into perspective, Bloomberg Intelligence said. Syngenta AG, the world’s largest maker of crop chemicals, rejected last month an offer from Monsanto Co., the biggest seed producer, partly on concerns that regulatory risks will far exceed a proposed $2 billion breakup fee.

Kassel, Germany-based K+S, Europe’s largest potash supplier, had risen 27 percent this year before newspaper Handelsblatt reported Potash’s interest on Thursday. The shares jumped 30 percent to 37.66 euros in Frankfurt on Friday, giving it a market value of 7.21 billion euros ($8.1 billion).

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