Canadian-based rivals Agrium Inc and Potash Corp on Monday said they had agreed to merge to create a $36-billion global crop fertilizer behemoth.

The new company will combine potash, nitrogen and phosphate production with a global distribution network, employing just under 20,000 people, and is to generate $500 million in annual savings from their combined operations, a joint statement said.

The new company, which has not yet been named, will be based in Saskatoon, in Canada's Saskatchewan province, and be 52-per cent owned by Potash Shareholders, with Agrium owners holding 48 per cent.

The merger will happen entirely through a stock swap with no cash changing hands.

The tie-up, which the companies called a merger of equals, was unanimously approved by their respective boards, but still needs the green light from shareholders and regulators.

"This is a transformational merger that creates benefits and growth opportunities that neither company could achieve alone," Agrium Chief Executive Officer Chuck Magro said in the statement.

Saskatoon-based Potash Corporation is the world's top producer of a potassium compound used in agriculture as a fertilizer.

The Calgary, Alberta-based Agrium, also produces potash in addition to having an extensive distribution network of chemical fertilizers in the United States.

The merger comes as the global demand for fertilizers is down sharply in emerging countries like Brazil due to the economic downturn.

The new company will have close to 20,000 employees, and operations and investments in 18 countries.

Potash Corp President and CEO Jochen Tilk said that the new company intends to carry forward best practices from both companies in corporate social responsibility, including commitments to employees, operating communities, and the environment.