Norway Would Probably Pay to Keep Stake After Yara-CF Tie

Norway would probably spend billions of dollars to maintain its stake in Yara International ASA if a merger being discussed occurs with CF Industries Holdings Inc., parties representing a majority of Norway’s parliament said.

The Conservative and Progress parties and the opposition Labor Party said they favor keeping minority control of Yara to ensure the fertilizer producer stays based in Oslo.

“That’s totally unproblematic,” Oeyvind Korsberg, the Progress Party spokesman for trade, said in a phone interview yesterday. “The state is overflowing with money, we’re injecting money in businesses abroad through our sovereign wealth fund. So access to capital is the least of our problems.”

Yara and Deerfield, Illinois-based CF said on Sept. 23 they’re in preliminary discussions about a merger-of-equals that would create the largest nitrogen fertilizer company with about $20 billion in sales. The Norwegian state owns about a third of the shares listed on the Oslo stock exchange, and has also built an $850 billion sovereign wealth fund, the world’s biggest, from taxes and interests in oil and gas production.

Norway’s Conservative and Progress parties form the minority government, while the Labor Party is the country’s biggest.

“Discussions are at an early stage,” Esben Tuman, a Yara spokesman said in a text message. CF spokesman Dan Swenson didn’t return a call for comment.

If talks between the companies resulted in a merger at current market value, Norway would have to pay an estimated $4.4 billion to keep a 34 percent stake, according to Bloomberg calculations. Norway currently has a 36.2 percent stake in Yara.

Capital Increase

The government said as late as in June that a reduction of the state’s stake in Yara to less than 34 percent wasn’t on the agenda.

“It’s extremely unlikely” that parliament will reverse that goal, said Gunnar Gundersen, the Conservative Party’s highest-ranking member on the Business and Industry Committee.

If a merger is proposed by the companies’ boards, the government will consider the deal and consult parliament, which would have to approve any capital increase, Gundersen said in an interview in parliament on Oct. 2.

If a deal is considered beneficial for a company, “the state must be prepared to increase the capital in some cases,” he said. “But that’s a big decision to make and a big debate in Parliament. I can’t promise anything, but I see that this could be one of the possibilities.”

Telenor, Kongsberg

The Conservative and Progress parties, which last year won elections to form a minority government supported by the Liberal Party and the Christian Democrats, have vowed to reduce the state’s role in business in Scandinavia’s richest country.

Labor, which controls about a third of parliament, also would like Yara’s headquarters to stay in Oslo, said Else-May Botten, a spokeswoman for trade and industry. The party can’t comment on this deal unless the companies reach an accord and the government presents a motion to parliament, she said.

Norway’s government said June 20 it will seek to reduce stakes in telecoms operator Telenor ASA and weapons manufacturer Kongsberg Gruppen ASA. It did stop short of proposing reductions in the state’s 67 percent stake in oil producer Statoil ASA even as it had said in last year’s campaign it could cut it to 51 percent.

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