A surge in shares in Agrium and PotashCorp prompted the two potash giants to reveal they were in tie-up talks, in a deal which would realise ideas over large-scale deals which have long been muted, but struggled for consummation.
The two groups, the top Canada-based potash producers, said in matching statements that they were in "preliminary" talks over a "merger of equals".
"No decision has been made as to whether to proceed with such a combination, no agreement has been reached, and there can be no assurance that any transaction will result from these discussions," the statements added.
Earlier, PotashCorp shares soared 11.5% to Can$23.30 for, and Agrium stock 7.1% to Can$124.81 for, before trading was halted by the Toronto stock exchange, pending the announcements.
A tie-up between the two groups would create a potash giant with a combined stockmarket value of some Can$33.6bn ($26bn) as of last night's closing prices, although the share surges on Tuesday underlined the belief that the companies can reap substantial synergy benefits from a deal.
Indeed, tie-ups between the large potash producers have long been muted, with weak values of the nutrient boosting the case for companies to increase their size, and boost margins through reaping economies of scale, and improving their grip on prices.
However, PotashCorp last year failed in an attempt to buy K+S, the European Union's top potash producer, for $8.8bn.
In 2013, PotashCorp scrapped a bid for Israel Chemicals - the world's sixth-ranked potash producer in which the Canadian group is a major shareholder - after a deal attracted opposition from Israeli politicians.
The last major deal between potash producers was six years ago, when Uralkali unveiled the $7.8bn acquisition of fellow Russian group Silvinit.
However, the Agrium-PotashCorp talks raised thoughts among investors that further deals could be in the offing, with shares soaring in other potash groups too.
Shares in Intrepid Potash, which rebounded sharply in March amid ideas that the US-based group was a takeover target, stood up 13.7% at $1.49 in lunchtime deals in New York, where stock in Chile's SQM added 3.0% to $26.33.
In Frankfurt, K+S shares gained 4.0% to E18.955, while Israel Chemicals stock added 4.5% to 15.90 shekels in Tel Aviv.
Stock in Agrium itself, having reopened for trading following the temporary halt, stood 6.4% higher at Can$123.97.
PotashCorp shares were 10.9% up at Can$23.17.
While the groups talked of a merger of equals, Agrium, at Can$16.10bn, had a slightly smaller market capitalisation than PotashCorp's Can$17.5bn as of last night's close.
Both are, with US-based Mosaic, members of the Canpotex potash export consortium.
By Mike Verdin