REFILE-UPDATE 3-Agrium, Potash say time is right for acquisition

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TORONTO, Nov 20 (Reuters) - Top fertilizer producers Agrium Inc (AGU.TO) and Potash Corp of Saskatchewan (POT.TO) said on Thursday they are on the lookout for acquisitions as their industry struggles, even though their own shares have tumbled.

Despite those ambitions, few potential targets remain after a wave of consolidation that swept the industry during the commodity boom that has since gone bust, executives with the Canadian-based companies said at a TD Newcrest agricultural conference in Toronto.

"We have grown retail quite dramatically. We have pretty much bought all the public companies that were out there, so if we look at further acquisitions, it would have to be acquisitions of significant private companies or the smaller mom-and-pop or smaller chains," said Agrium's chief financial officer, Bruce Waterman.

Agrium completed a hefty purchase earlier this year when it paid $2.65 billion for UAP Holding Corp, the largest independent distributor of agricultural and noncrop products in the United States and Canada. The company has set a goal of boosting its market share in the retail market to 30 percent from 15 percent over the next few years.

Fertilizer prices surged in the first half of this year as demand boomed on tight inventories and record grain prices. But the credit crisis and sputtering world economies have led to big drops in prices for crop nutrients.

Share prices of the Canadian producers have been pulled down in the meltdown, and fell sharply on Thursday as world stock markets skidded on more global economic fears.

Agrium sank C$5.88, or 16 percent, to C$30.19 on the Toronto Stock Exchange. Potash fell C$9.43, or nearly 12 percent, to C$71.59. Both are down about 70 percent since the end of June.

Still, Waterman said Agrium, the world's third-largest nitrogen producer and the top U.S. retailer of crop supplies, would wade back into the acquisition pool once it has realized all the benefits of the deal.

"Once we are comfortable that we have captured all the synergies in the UAP acquisition -- that is our primary focus right now -- we will start to go again," he said during the conference.

Waterman said that while the acquisitions are cheaper, a lot more of them must be done to get the same benefits from a takeover.

Potash Corp CFO Wayne Brownlee said Potash Corp would be patient in its acquisition plans and not expand into certain areas, such as nitrogen and phosphate, just for the sake of expansion.

"A lot of the distressed situations that you are seeing with some publicly traded companies are occupying space that we don't have a long-term strategic interest in," he said.

"We do have an interest in potash, and anything that we can do to strengthen our potash hand, we would have an interest in doing that."

Meantime, Brownlee said, Potash will focus on established expansion plans, which include $2 billion in capital expenditures in 2009 to boost capacity. It has spent about $1.2 billion so far this year.

"We will keep on executing this. It would be difficult for us to execute it any faster than what we are doing," he said. ($1=$1.29 Canadian) (Reporting by Scott Anderson and Jeffrey Jones; editing by Rob Wilson)