Canada's Agrium Inc and Potash Corp of Saskatchewan Inc said they would combine, a deal that would create a fertiliser and farm retailing giant with proforma enterprise value of $36 billion but also trigger US regulatory scrutiny.

Potash Corp, the world's biggest crop nutrient company by capacity and Agrium, North America's largest farm retailer, said the combined company will be largest crop nutrient company in the world and third largest natural resource company in Canada.

The companies had said on August 30 that they were in talks to merge. The merger will create a company dominant in North America, controlling nearly two-thirds of potash capacity, 30 per cent of phosphate production capability and 29 per cent of nitrogen capacity, National Bank analyst Greg Colman had said at the time.

The deal would be the latest in a string of agriculture merger attempts, including potential combinations of seed giants Monsanto Co and Bayer AG, and ChemChina and Syngenta.

Fertiliser companies have suffered lower profits as crop nutrient prices tumbled due to excessive supply and weak demand. Crop prices have also been hurt, with corn and wheat at seven-year and 10-year lows respectively, giving farmers less incentive to maximise production with fertiliser.

Potash Corp shareholders will get 0.400 common shares of the combined company for each share they hold and Agrium shareholders will get 2.230 common shares for each share they own, the companies said on Monday.

Potash Corp US-listed shares were up slightly at $17.03 in light premarket trading. Agrium US-listed shares, which closed at $95.21 on Friday, were untraded.

Potash Corp shareholders will own about 52 per cent of the new company, with Agrium shareholders owning the rest after the deal closes, which is in mid-2017.

The combined company would have had 2015 net revenue of about $20.6 billion and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $4.7 billion before synergies, on a proforma basis, the companies said.

The companies expect annual operating synergies of up to $500 million from the merger.

Agrium chief executive Chuck Magro will lead the combined company. Potash Corp CEO Jochen Tilk will be its executive chairman.

Barclays Capital Inc and CIBC Capital Markets are Agrium's financial advisers, while BofA Merrill Lynch and RBC Capital Markets are Potash Corp's financial advisers.

Morgan Stanley & Co LLC is serving as joint financial adviser to Agrium and Potash Corp.

Stikeman Elliott LLP and Jones Day are serving as legal advisers to Potash Corp. Agrium's legal advisers are Blake, Cassels & Graydon LLP, Norton Rose Fulbright Canada LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Latham & Watkins LLP. - Reuters