CF Industries Holdings Inc. agreed to acquire European and North American assets from OCI NV for about $8 billion to create what it says will be the world’s largest publicly traded producer of nitrogen fertilizer.
The cash and stock transaction will see the creation of a new holding company based in the U.K., of which CF investors will own 72 percent and OCI the rest. The merger includes the assumption of about $2 billion in debt, the companies said in a statement Thursday.
The deal is a fallback for Deerfield, Illinois-based CF after talks to merge with Norway’s Yara International ASA fell apart in October. Combining with Amsterdam-based OCI marks a strategy shift for CF, which until now has thrived as a North American supplier of nitrogen fertilizer using cheap raw-materials provided by the nation’s shale gas industry. OCI, part-owned and run by Nassef Sawiris, has production assets in the Netherlands and the U.S.
The combination is one of several multibillion-dollar deals to emerge this year among agriculture-focused companies. Monsanto Co., the world’s largest seedmaker, is pursuing a takeover of Swiss pesticide giant Syngenta AG, while Canadian fertilizer company Potash Corp. of Saskatchewan Inc. is seeking to acquire German rival K+S AG.
CF has production facilities in the U.S., Canada and the U.K. The OCI deal will help it expand outside North America while still allowing it to grow in its home market, where OCI is building a nitrogen plant in Iowa and a methanol factory in Texas. Sawiris, the richest person in Egypt, has long held ambitions to expand in North America.
The enlarged CF, which will keep its principal offices in Deerfield, will have a combined production capacity of about 12 million nitrogen fertilizer-equivalent tons.
“This deal could add discipline to an industry facing stark overcapacity,” Jason Miner, an analyst at Bloomberg Intelligence, said Thursday by phone. “It’s a timely development.”
CF expects to get about $500 million in after-tax savings a year from combining the operations. Its shares rose 2.2 percent to $63 at the close in New York. OCI climbed 3.6 percent to 31.40 euros in Amsterdam.
CF was advised by Morgan Stanley and Goldman Sachs, with Skadden, Arps, Slate, Meagher & Flom LLP providing legal advice. Zaoui & Co., along with Bank of America Merrill Lynch and JP Morgan advised OCI, with Allen & Overy LLP on legals. Allen & Co. advised Nassef Sawiris and the Sawiris family.