Norway's Yara, CF in talks to create $27.5 billion global fertilizer producer
By Balazs Koranyi and Joachim Dagenborg
OSLO (Reuters) - Norway's Yara and Chicago-based CF Industries are in talks about a merger of equals that would create a $27.5 billion global fertilizer producer to rival world No.1 Potash Corp in an oversupplied and fragmented market.
The deal would give Yara, the world's biggest nitrate fertilizer maker, major production units in the United States, where costs are lower due to cheap gas. CF Industries would gain a global footprint through Yara's presence in 150 countries with production assets and a well established distribution network.
The two firms' combined market capitalization of $27.5 billion would put it almost on par with Canada's Potash Corp of Saskatchewan, the world' largest fertilizer firm worth $28.9 billion.
The firms said in separate filings that the talks were at an early stage, and there were no assurances that these would result in any transaction.
Yara said it had been forced to go public because information about the talks were at a risk of a leak. It wanted to conclude the process quickly but said nothing was expected in the coming days.
Yara shares surged nearly 9 percent in early trade and were 6 percent higher at 1330 GMT (9.30 a.m. EDT), valuing the company at $14.4 billion. CF rose 3.5 percent in early trade, giving the firm. Market capitalization of $13.2 billion.
"At first glance, we view any future deal as positive for Yara," JPMorgan said in a note. "A deal would diversify the company's cost base away from Europe – which remains one of the most expensive production regions globally."
"Yara could integrate its US export/marketing business for example and expand its nitrate business into North America," the note said. Continued...