Norwegian Yara International ASA has signed a cash merger agreement with American Terra Industries Inc. at a price of USD 41.10 per share, representing a market capitalization of Terra of USD 4.1 billion. The transaction will give Yara an improved position in the US, and is planned to be supported by a Yara rights issue of USD 2.0 – 2.5 billion, according to Oslo Stock Exchange.
“Yara is committed to the US market, and this transaction presents an attractive opportunity for both companies to strengthen their positions in the US.”
Jørgen Ole Haslestad
The worlds largest fertilizer producer, Norwegian Yara International ASA, has signed a cash merger agreement with Terra Industries Inc. at a price of USD 41.10 per Terra share, representing a market capitalization of Terra of USD 4.1 billion, Oslo Stock Exchange says.
The transaction will give Yara an improved position in the US, and is planned to be supported by a Yara rights issue of USD 2.0 – 2.5 billion. The agreed Terra share price of USD 41.10 represents a premium of 23.6% above the closing price on 12 February 2010.
“Yara is committed to the US market, and this transaction presents an attractive opportunity for both companies to strengthen their positions in the US. Yara and Terra are a perfect fit, and the combination will elevate Yara to a truly global leader in the industry. Both companies are strong in ammonia and nitrates, and have complementary geographical footprints. Terra’s ammonia and upgraded fertilizer distribution system in the US will be combined with Yara’s global sourcing and optimization capabilities as the world’s largest producer and trader of fertilizer and ammonia”, Jørgen Ole Haslestad, President and CEO of Yara International ASA. says in a statement.
“We have signed the merger agreement on the basis of Yara’s proven M&A value creating track record, a positive fertilizer market outlook and the improved competitive edge of US nitrogen producers. The structural changes over the last years in the global and US gas market with ample LNG and shale gas have strongly improved the US producers cost position. North American producers are in addition benefiting from logistical advantages as the US will continue to need large imports of nitrogen, and the high construction costs for new plants now favor existing production capacity”, says Jørgen Ole Haslestad.
Yara has identified yearly cost synergies with pre-tax effects of USD 60 million to be harvested within a year after closing. In addition, Yara is targeting soft synergies of the same magnitude, including improved utilization and optimization of logistical systems.
Terra has delivered an average annual adjusted EBITDA of USD 613 million over the last three years ending September 2009. The estimated enterprise value of USD 4.3 billion corresponds to an EBITDA multiple of 7.0 before synergies and 5.9 after synergies.
Reports better than expected Q4 figures
Yara International ASA also reports improving results as margins expand from third quarter, Monday. Volumes were stable but demand and prices improved strongly at the end of the quarter, according to the company.
Yara reports fourth-quarter net income after non-controlling interests of NOK 1,424 million (NOK 4.93 per share), compared with a negative NOK 2,109 million last year (NOK 7.27 per share).
Excluding net foreign exchange losses and special items, the result was NOK 4.35 per share, compared with a negative NOK 0.10 per share in fourth-quarter 2008.
EBITDA for the quarter was NOK 1,394 million compared with 1,626 in fourth quarter 2008. Yara’s board will propose to the Annual General Meeting a dividend payment of NOK 4.50 per share for 2009.
“Our underlying fourth-quarter results were non-satisfactory. Global NPK sales continued to be hampered by high potash prices, and until November European nitrate prices were held back by European distributors still unwilling to take positions for the spring application,” Jørgen Ole Haslestad, President and Chief Executive Officer of Yara. says.
The share price of Yara (YAR)is tumbling down 5,6% at Oslo Stock Exchange Monday, while the benchmark index is up 0,15%.
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