CF Industries (CFI), the US fertiliser business that jointly owns manufacturer GrowHow UK, has acquired Yara International’s half share of the company. At the same time, it has divested its 50% interest in the Keytrade AG international fertiliser trader based in Zurich.
GrowHow UK was formed in 2007 through the merger of the UK’s two fertiliser manufacturers – Kemira GrowHow, which was owned by Yara International, and Terra Industries the US business which had acquired the former ICI Fertilisers assets in 1997. It was equally owned by Yara and Terra, with the Terra share passing to CFI in 2010, when that company won a long running battle with Yara and Agrium for control of Terra. The 2007 shareholder agreement contained an early 2015 option to acquire the whole equity, with both Yara and CFI bidding for the assets in a “shoot-out” process.
Merger talks between CF Industries and Yara International in autumn 2014 were called off after a month, but led to significant boardroom changes at Yara.
Yara has now agreed to sell its 50% stake in GrowHow UK to CFI for $648 million including £68m in unfunded pension liabilities.
GrowHow, which reported 2014 earnings before tax and interest of $156m, has a UK production capacity of some 0.8 million tonnes of ammonia, 1.1m tonnes of AN and 0.5m tonnes of compound NPK from its two plants at Billingham and Ince.
"The final bid from CF represents an attractive value to Yara,” said Yara president and chief executive Torgeir Kvidal. “We remain dedicated to British agriculture and look forward to continue to work with UK farmers to increase their yield and profitability with our high quality products and services. Furthermore, Yara's growth strategy remains on track, as we work hard both to deliver already committed projects and to develop our pipeline of new opportunities."
CFI’s 50% equity in Keytrade has been purchased by the trader’s principals under founder, chairman and chief executive Melih Keyman.
Keytrade was founded in 1997, with CF Industries buying a half share ten years later in 2007. This investment led to Keytrade exclusively exporting CF phosphate products mined in the US to global customers and importing UAN fertilisers into North America. Keytrade diversified into trading grains and feed materials from 2011.
CF’s decision to divest its interest in Keytrade follows the late 2013 sale of its phosphate segment in Florida to Minnesota-based Mosaic. This move inevitably changed the nature of the joint phosphate business between CF and Keytrade, and also halted the nitrogen-related business in North America. Therefore the chance arose for the principals of Keytrade to buy the CF equity and follow their own business plan.
“We have enormous respect for Melih Keyman and the rest of the Keytrade organization,” commented Tony Will, president and chief executive officer, CF Industries Holdings. “We have a great working relationship and look forward to continuing to work with Keytrade as our preferred international trading partner.”
Mr Keyman added: “While our eight-year partnership has created value for both parties, under the new global supply scenario it is important for Keytrade to regain its full flexibility as a private company and be able to pursue the full range of attractive growth opportunities. Changed circumstances required us to exercise our options. We have enjoyed and benefitted tremendously from being partners with CF and look forward to working with it as before.”