Ownership of a chunk of Canadian nitrogen fertilizer manufacturing capacity has become clearer as the Norwegian firm that owns the former Saskferco N plant has dropped its bid for a U.S. player.
Yara International on Friday said it “will not propose an improvement” to its bid for Sioux City-based Terra Industries, in view of a higher offer for Terra from its long-rejected suitor CF Industries.
And with Calgary fertilizer and ag retail giant Agrium having bowed out of its bid for Chicago-based CF, ownership of all four companies’ Canadian fertilizer assets appears decided, for now.
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Once its US$4.7 billion deal for Terra is finalized, CF will own Terra’s N plant at Courtright, Ont., near Sarnia, along with CF’s own N capacity at Medicine Hat, Alta.
With a CF/Terra merger now nearly complete, Agrium’s deal to sell a 50 per cent stake in its Carseland, Alta. N plant to Terra is void.
And it’s now a moot point as to whether a Yara/Terra merger would have required Yara to shed any Canadian assets — specifically, its N plant at Belle Plaine, Sask., about 25 km east of Moose Jaw.
Yara doesn’t walk away empty-handed, however. With its own US$4.1 billion deal for Terra now cancelled, Yara is entitled to a US$123 million break-up fee from Terra.
That money is “payable concurrently with merger agreement termination,” Yara said in a statement Friday.
“Terra would be a perfect fit to Yara and attractive at our proposed valuation, but we will not increase our offer that was first accepted by the Terra board,” Yara CEO Jorgen Ole Haslestad said Friday.
“The growth ambition of Yara will be carried out for the future on the same value-generating basis as the company has done successfully in the past. (The) U.S. remains an attractive market for us and we will continue to search for opportunities to grow our business in the region.”
“We are excited to begin working together to become a more competitive global fertilizer player with enhanced scale, a broader strategic platform and enhanced access to capital markets,” CF CEO Stephen Wilson said in a separate release Friday, announcing CF and Terra’s “definitive” merger agreement.
“Our customers will benefit from expanded availability and flexibility of nitrogen product sourcing as a result of the complementary distribution and manufacturing assets of the two companies.”
