Norway's Yara pays $425m to acquire several LatAm fertilizer firms

26 November 2013 13:48  [Source: ICIS news]

LONDON (ICIS)--Norwegian fertilizer giant Yara International on Tuesday agreed a $425m deal with Texas-based Omimex Resources Inc to acquire fertilizer production facilities in Colombia and several distribution companies across Latin America.

The deal for the OFD Holdings Inc group includes companies such as Abocol (Colombia), Misti (Peru), Omagro (Mexico), Fertitec (Panama and Costa Rica), Cafesa (Costa Rica) and Norsa (Bolivia), Yara said.

The Oslo-based company added that the purchase "further strengthens Yara's downstream footprint and growth platform in Latin America and is highly complementary to its recent acquisition of Bunge's fertilizer business in Brazil".

"I am excited to announce this agreement, which re-confirms Yara's long-term commitment to Latin America," said Yara President and CEO, Jørgen Ole Haslestad. "OFD fits well with Yara, and will further improve our downstream positioning within the fast-growing cash-crop markets in the region.

"This deal marks a further step for our global growth ambition, adding almost half a million tonnes of upstream fertilizer capacity, further leveraging our capabilities within crop nutrition and value-added fertilizer, to the benefit of our shareholders and agricultural development in Latin America."

As part of the agreement, which is expected to close during second quarter 2014 and is subject to due diligence, approval of competition authorities and other customary approvals, Yara will acquire $40m (€30m) of real estate for future expansion in the region.

Yara continued: "OFD owns and operates a fertilizer production facility in Cartagena with an annual capacity of approximately 320,000 tonnes of compound NPK [nitrogen, phosphorus and potassium], 100,000 tonnes of calcium nitrate (CN) and 70,000 tonnes of ammonium nitrate (AN), with integrated ammonia production.

"In addition, OFD has a production capacity of 25,000 tonnes of single super phosphate (SSP) per annum through Fosfatos de Boyaca in Colombia. Finally, OFD controls approximately 700,000 tonnes of NPK blending capacity across 12 sites and 100,000 tonnes of liquid fertilizer capacity as part of its fertilizer distribution network across Colombia, Mexico, Peru, Bolivia, Costa Rica and Panama.

"In 2012 OFD sold 1.13m tonnes of fertilizer, generating net revenues of $796m and earnings before interest, tax depreciation and amortisation (EBITDA) of $35m. The EBITDA was $64m in 2011. The $425m enterprise value includes working capital of $332m. Yara estimates an annual synergy potential of $20m through logistics and sourcing optimisation and substituting third-party sourced products with Yara products."

Commenting on today's deal, Abocol president Jorge Bernal added: "We are fully convinced that the knowledge, experience and portfolio of a global company like Yara, combined with the regional know-how of OFD group of companies in each of the countries, added to our closeness to the Latin-American farmers, will help our customers reach the required levels of agricultural productivity."

In August 2013, Yara completed the purchase of Bunge's Brazilian fertilizer operations after agreeing a $750m deal with the US agribusiness major.

($1 = €0.74)

By: Richard Ewing
+44 208 652 3214

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