• Companies evaluating option of having Dutch parent company
  • CF and OCI say they remain committed to merger agreement

(Bloomberg) -- CF Industries Holdings Inc. said it remains committed to its planned $5.4 billion acquisition of fertilizer assets from Netherlands-based OCI NV and will look for ways around a U.S. clampdown on tax-inversion deals.

One option under evaluation is using a Dutch parent company, though any new deal structure will have to be approved by the boards of both businesses and their shareholders, Deerfield, Illinois-based CF and Amsterdam-based OCI said in a joint statement.

The Treasury Department last week issued rules meant to block inversions in which a U.S. company adopts a foreign address by buying a company in another country. CF Industries had planned to get a U.K. tax address through the OCI deal.

“We still think there is value in the deal even if they can’t successfully complete the tax inversion,” Yousef Husseini, an analyst at Egyptian Financial Group-Hermes, said. “There are lots of synergies from the deal and the combined entity would control a significant portion of U.S. nitrogen fertilizer supply.” Husseini rates OCI shares a buy.

Shares of OCI dropped 1.1 percent to 22.79 euros as of 9:28 a.m. in Amsterdam trading. The stock has lost 3.9 percent this year giving the company a market value of 4.78 billion euros ($5.08 billion). CF is valued at $10.2 billion.

The proposed CF inversion transaction is the only one of three pending that planned to adopt a tax address in a country that’s different from that of the foreign merger partner. It’s earmarked about $500 million of after-tax cost savings through the merger of operations. Most of that would come from paying tax at the lower U.K. corporate rate of 20 percent, Paul A. Massoud, an analyst at Stifel Nicolaus & Co. in Washington, said last week in a note.

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