Yara agrees $750m deal for Bunge's Brazilian fertilizer business

07 December 2012 12:02  [Source: ICIS news]

Yara agrees $750m deal for BungeLONDON (ICIS)--Fertilizer giant Yara International on Friday announced it will acquire Bunge's fertilizer business in Brazil for $750m (€576m) – a move the firm describes as “significantly strengthening its fertilizer position in the country”.

The pair will also enter into a long-term fertilizer supply agreement, enabling Bunge to continue supplying fertilizer to farmers as part of its grain origination activities and creating a framework for logistics and other commercial activities.

Bunge operates 22 blending units across Brazil and delivered 4.8m tonnes of fertilizer products in 2011, with revenues of nearly $2.65bn and an adjusted EBITDA of $77m.

According to its website, Bunge has been present in Brazil since 1905 and now boasts operations in 19 states and more than 20,000 employees. The company’s 150 units include distribution centres, silos and port facilities.

"I am pleased to announce this important move in Brazil, building further scale for Yara following previous acquisitions in 2000 and 2006," said Jorgen Ole Haslestad, President and CEO of Oslo-headquartered Yara, adding the deal remains subject to Brazilian regulatory approval.

“Brazil is a key growth market where there is significant further potential for acreage and yield increases. Today's agreement also creates a strong platform for future growth opportunities within the Brazilian fertilizer industry.

"Our talks with Bunge to reach this agreement have been conducted in a positive and constructive manner, and we look forward to expanding our cooperation with Bunge in our role as a key input supplier to Brazilian agribusiness.”

In a statement, Yara said the $750m enterprise value comprises a net operating capital value of $385m and other assets valued at $365m. The operating capital value is subject to post-closing adjustment.

Yara is targeting minimum annual synergies of $25m by 2014 in supply chain synergies – comprising scale advantages in raw material sourcing and freight and port operations  – enlarged downstream footprint for distribution of premium products, and operational and administrative synergies.

“With this agreement, Yara reinforces its position as a significant fertilizer company in Brazil, with a well-anchored local commitment combined with global leadership in safe and reliable production and the largest fertilizer trade network globally,” Yara added.

“This positions Yara as a key enabler for competitive fertilizer supply to Brazil and future fertilizer growth opportunities in the country.”

($1 = €0.77)

By: Richard Ewing
+44 208 652 3214

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