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UPDATE 1-Merged fertilizer company Nutrien eyes U.S. farm suppliers as cash pile builds

pile builds@ (Adds CEO comments, share activity)

WINNIPEG, Manitoba, Nov 8 (Reuters) - Nutrien, the company to be formed by year-end from the merger of Agrium Inc and Potash Corp of Saskatchewan, plans to expand its U.S. farm supply network and return cash to shareholders, Agrium Chief Executive Chuck Magro said on Wednesday.

Regulators in China and India require Potash to divest itself of minority stakes in three fertilizer companies - SQM , ICL Israel Chemicals and Arab Potash Co PLC - as a condition of approving the $25-billion merger.

The sales could fill Nutrien's coffers with $5 billion after taxes and banker fees, according to a BMO estimate, helping it consolidate the fragmented U.S. farm retail sector, which sells seed, chemicals and fertilizer to farmers.

Nutrien, which Magro will lead as CEO, will quickly clarify its capital strategy after the merger closes late this year and its new board takes shape, he said.

An undetermined amount of capital will fund retail growth as a "key priority," Magro said on a conference call with analysts. It will also return some cash to shareholders, either with a larger dividend or share buybacks, he said.

"The allocation of capital is really going to be targeted toward long-term shareholder growth," Magro said .".. It's fair to say that retail growth will be a key priority."

The company is open to big farm retail acquisitions, and Agrium already has some medium-sized deals in the works this quarter, he said. Agrium is the biggest U.S. farm retail supplier and has for years been steadily buying up stores.

Agrium shares fell 1.6 percent in Toronto to C$136.36, after it posted a bigger-than-expected quarterly loss late on Tuesday. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by James Dalgleish)