Yara Yields Terra to CF, Agrium Denied
March 22 2010 03:13 PM by joakley
The yearlong clash of the fertilizer and diesel exhaust fluid (DEF) giants finally ended when CF Industries topped Yara International to purchase Terra Industries for roughly $4.7 billion, snubbing Agrium Inc.’s plays for CF.
The companies are the largest producers of DEF, a nitrogen oxide (NOx) scrubbing, aqueous solution of urea – a nitrogen compound – expected to sell roughly 1 billion gallons by 2020. EPA mandates that DEF be replenished in engines that use selective catalytic reduction (SCR) to meet the agency’s latest and most stringent emissions standards for on-road diesels.
After courting Terra for over a year, Deerfield, Ill.-based CF appeared beaten when it was told by Terra’s directors, “Terra is not for sale,” according to a letter CF CEO Stephen Wilson sent to Terra’s board. When Terra turned around weeks later to accept a somewhat controversially valued bid from Norway’s Yara, it green lit CF to reoffer and demand full and transparent consideration. Faced with cash and stock valued at some $600 million more than Yara’s standing bid, Terra terminated the agreement (at the cost of a $123 million break-up fee) with Yara when the Norwegians ceded to CF’s “superior” offer.
“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,” said Yara International CEO Jorgen Ole Haslestad. 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 remain the global leader in the fertilizer industry, and there will be more opportunities around the world to grow our business further.”
CF’s acquisition of Terra effectively defeated repeated attempts at hostile takeover from Calgary-based agribusiness giant Agrium, whose offers for CF were conditional upon the Terra deal falling through. “It is unfortunate we could not conclude this transaction, given the strong support shown by both CF and Agrium shareholders. Agrium applies a disciplined approach to employing capital and will continue to focus on the significant growth opportunities available to us globally across the agricultural value chain,” said Agrium CEO Mike Wilson.
According to CF, its merger with Terra makes the company the world’s second largest nitrogen fertilizer producer, behind only Yara. The company expects to realize annual cost synergies of up to $135 million by eliminating “overlapping corporate functions,” optimizing transport and distribution, and leveraging economies of scale. “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,” said Stephen Wilson. “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.”
One reason these four companies have zeroed in on the U.S. market is the compounding growth expected in North American demand for DEF, made from an aqueous solution of the nitrogen compound urea. As fleets turnover and newer trucks with SCR deploy, industry experts say the DEF market could reach 1 billion gallons annually by 2020.
Each firm is already a major player in the production and sale of DEF via several distributors, brand names and retailers. Here’s a snapshot of how each gets to market:
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To date, Terra has supplied TerraCair DEF to chemical distributor Brenntag and both Ford and Daimler North America with factory fills and for retail resale.
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Yara North America distributes Air1 DEF via Mansfield Oil Company’s DeliveryONE network and Colonial Chemical Company to localized distributors and fuel providers, including major truck stops TravelCenters of America (TA) and Petro Stopping Centers.
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From its Borger, Texas nitrogen facility, Agrium supplies windshield wash and antifreeze mainstay Old World Industries with its BlueDEF brand. Distributor McLane stocks major truck stops Pilot Travel Centers, Flying J, Love’s Travel Stops, and others with BlueDEF.
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CF is engaged in the production of DEF, but has not disclosed any of its supply arrangements.
Quelle: http://opisdef.com/post/2010/03/22/...-Terra-to-CF-Agrium-Denied.aspx
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