POTASH CORP OF SASKATCHEWAN INC

On September 11, 2016, the company entered into an Arrangement Agreement with Agrium Inc. (“Agrium”) pursuant to which the company and Agrium have agreed to combine their businesses (the “Proposed Transaction”) in a merger of equals transaction to be implemented by way of a plan of arrangement under the Canada Business Corporations Act. On November 3, 2016, the Proposed Transaction was overwhelmingly approved by shareholders of both companies. On November 7, 2016, the Ontario Superior Court of Justice issued a final order approving the Proposed Transaction. The companies have since received unconditional regulatory clearance in Canada, Brazil and Russia and conditional approval from India requiring PotashCorp’s commitment to divest its minority shareholdings in Arab Potash Company (“APC”), ICL and Sociedad Quimica y Minera de Chile S.A. (“SQM”) within a period of 18 months from October 18, 2017. The regulatory review and approval process continues in the U.S. and China. Upon the closing of the Proposed Transaction, the new parent company will be named Nutrien Ltd. (“Nutrien”). The Proposed Transaction is currently anticipated to be completed by the end of the fourth quarter of 2017 and is subject to customary closing conditions, including remaining regulatory approvals.

During the third quarter of 2016, PotashCorp entered into an Arrangement Agreement (the Arrangement Agreement) with Agrium Inc. (Agrium) to combine their businesses (the Proposed Transaction) in a merger of equals transaction to be implemented by way of a plan of arrangement under the Canada Business Corporations Act. During the third quarter of 2017, the Canadian Competition Bureau approved the Proposed Transaction. In October 2017, a conditional approval was obtained from India requiring the companies’ commitment to divest three of PotashCorp’s minority shareholdings. From a regulatory standpoint, we continue to cooperate with the various enforcement agencies in their reviews. We have received unconditional regulatory clearances in Canada, Brazil and Russia and a conditional approval from India. We continue to work on obtaining approval from China and the US.

Earnings in the third quarter of 2017 were lower than the same period of 2016 due primarily to higher gross margin in potash being more than offset by lower gross margins in nitrogen and phosphate, higher income tax expense and other expenses (other income in 2016). Earnings in the first nine months of 2017 were higher than the same period of 2016 due primarily to higher gross margin in potash and income tax recovery in 2017, compared to income tax expenses in 2016, which more than offset lower gross margins in nitrogen and phosphate and higher other expenses relating to the Proposed Transaction.

Global potash prices improved for the fifth consecutive quarter as agronomic need and affordability led to strong demand in all major markets. Shipments to China and India accelerated following contract settlements early in the third quarter while deliveries to Latin America continued at a record pace. In North America, dealers worked to position product in anticipation of a strong fall application season, leading to elevated shipment levels.

There have been no material changes to our critical accounting policies in the first nine months of 2017. Certain of these policies, such as long-lived asset impairment, derivative instruments, provisions and contingencies for asset retirement, environmental and other obligations, and capitalization and depreciation of property, plant and equipment, involve critical accounting estimates because they require us to make subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts could be reported under different conditions or using different assumptions, particularly in the current market environment. We expect to perform an assessment of certain aspects of our operations in the fourth quarter of 2017, the outcome of which could result in us not being able to recover all or a portion of our investment in certain assets disclosed in Notes 13 and 19 of our 2016 AIR. See page 35 of this Form 10-Q for a discussion of an impairment of specialized phosphate assets. Impairment sensitivities relating to cash-generating units in our phosphate segment are described on page 89 of our 2016 AIR.