DEERFIELD, Ill. — Illinois-based CF Industries Holdings, Inc. confirmed last week it is discussing a possible merger with Yara International ASA in Norway – a deal that would lead to the world’s largest fertilizer supplier.

Representatives from both companies declined to discuss details of the possible merger, issuing brief statements only to confirm talks are under way and are in the "early stage." Unlike Yara, CF Industries is wholly located within the United States and may be seeking cost-effective ways to expand into overseas markets, one analyst said.

Yara, meanwhile, has been looking to expand into the U.S. market for several years. It made a strong bid to buy Iowa-based Terra Industries in 2010 but was outbid by CF Industries and its $4.7 billion offer. "The deal would give Yara access to the best nitrogen fertilizer market in the world," wrote Mark Gulley, an analyst with BGC Financial LP in New York.

Both companies rank near the top in the industry, with Yara valued at about $14.6 billion and CF Industries, at about $12.7 billion. The combined company would have a market capitalization of more than $26 billion, second to Canada-based Potash Corp. But a combined company would have annual sales of about $20 billion, nearly three times that of Potash, according to Gulley.

Yara’s desire to become more of a global player is well known, Gulley wrote, and these days such a move is timed perfectly in terms of taking advantage of cheaper natural gas. Natural gas is the main ingredient of ammonia, which forms the base of nitrate fertilizers.

Thanks in part to the nation’s use of hydraulic fracturing, natural gas is plentiful and less expensive than in years past, which has helped CF Industries’ bottom line. According to Bloomberg, the company’s operating profit margin last year was about 43 percent; Yara’s was 9.2 percent. "Besides the obvious petrochemical investments occurring in North America to take advantage of low cost gas, the rapid development of unconventional energy resources is buoying other industrial markets," wrote Paul Bjacek, an analyst at Accenture Plc.

According to the American Chemistry Council, lower natural gas prices have spurred the development of $124 billion in new factories for chemicals in the past two years, including $12.7 billion in new fertilizer plants expected to be operating by 2020, Gulley wrote.