Agrium and Potash Corp. of Saskatchewan have agreed to combine in a merger of equals to create a world-class integrated global supplier of crop inputs. Under the agreement, which the boards of directors of both companies unanimously approved, a new parent company will be formed to own both companies.

PotashCorp shareholders will receive 0.400 common shares of the new company for each common share of PotashCorp they own, and Agrium shareholders will receive 2.230 common shares of the new company for each common share of Agrium they own.

The new company, which combines a low-cost potash and high-quality nitrogen and phosphate production assets with an established retail network, will be a leader in the fertilizer industry with close to 20,000 employees, operations and investments in 18 countries, and a pro forma enterprise value of $36 billion.

“The integrated platform established through our combination will greatly benefit customers and suppliers, and support even greater career development opportunities for employees,” said Jochen Tilk, president and CEO, PotashCorp. “Our workforce and the communities in which we operate are critical to both PotashCorp and Agrium, and we intend to carry forward best practices from both companies in corporate social responsibility, including commitments to employees, operating communities and the environment.”

The deal combines the largest crop nutrient company and the third-largest natural resource company in Canada into one Canadian-based fertilizer giant. “This is a transformational merger that creates benefits and growth opportunities that neither company could achieve alone,” said Chuck Magro, president and CEO, Agrium. “Combining our complementary assets will enable us to serve our customers more efficiently, deliver significant operating synergies and improve our cash flows to provide capital returns and invest in growth.”

The combination is expected to generate up to $500 million of annual operating synergies primarily from distribution and retail integration, production and SG&A optimization, and procurement. The synergies imply value creation for the combined enterprise of up to $5 billion, or a 20% increase in combined market capitalizations at the time of the initial announcement.

Upon closing of the transaction, Jochen Tilk will serve as executive chairman, and Chuck Magro will serve as CEO, both reporting to the new board of directors. Wayne Brownlee will serve as CFO, and Steve Douglas will serve as chief integration officer. The new company will also remain committed to Canpotex, the global logistics and marketing company that provides efficient and cost-effective distribution to many of the world’s fastest growing potash markets. The transaction is expected to close during mid-2017.