Oslo (2008-07-15): Yara International ASA has entered into an agreement to acquire Canadian nitrogen producer Saskferco for CAD 1.6 billion in enterprise value. The landmark transaction strengthens Yara's production and marketing position in North America and serves as a solid platform for further growth and value creation.
Through this transaction, Yara will acquire a world-class nitrogen manufacturing plant near Belle Plaine, Saskatchewan, in Canada and storage facilities in Saskatchewan and Manitoba. The Saskferco plant is one of the world's most gas efficient producers of ammonia, urea and UAN, with strategic proximity to western Canada's large and cost competitive gas reserves. When completed, the deal will add 650,000 tons of ammonia, 980,000 tons of urea and 230,000 tons of UAN in annual production capacity. In addition to this, current capacity expansion projects will increase ammonia and urea production to 725,000 and 1,115,000 tons annually from mid 2009 for an investment cost of CAD 84 million. Natural gas supply to the plant is linked to AECO Hub, which has historically been priced lower than Henry Hub.
"This acquisition represents another significant step in Yara's growth strategy, and Saksferco's production and distribution capabilities are an excellent strategic fit with our existing assets in North America. It provides a strong foundation for further growth through an efficient manufacturing facility located close to major gas production and with proximity to an important regional agricultural market for urea and UAN", says CEO and President of Yara International ASA, Thorleif Enger.
Saskferco, a private company owned 50 % by the Mosaic Company, 49 % by the provincially owned Investment Saskatchewan and 1 % by Canadian Imperial Bank of Commerce (CIBC), was established in 1988. The nitrogen manufacturing facility in Saskatchewan was completed in 1992, with a capacity expansion in 1997, which made it the largest urea granulation unit in North America. In 2004 a UAN plant was added to the facility and in 2007 a new expansion project was started to further boost ammonia and urea production. The company, which has approximately 150 employees, generated revenues of CAD 505 million and an EBITDA of CAD 202 million for fiscal year ended 31 May 2008.
The transaction, which will be funded through existing credit lines, is expected to close in Q3 2008, subject to fulfilment of closing conditions including approval by the relevant regulatory authorities in Canada and the United States.
Torgeir Kvidal, Investor Relations
Telephone (+47) 24 15 72 95
Cellular (+47) 91 33 98 32
Hamed Brodersen, Media Relations
Cellular (+47) 40 46 81 10
Yara International ASA is a leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilizers and agronomic solutions, we help provide food for a growing world population. Our industrial product portfolio includes environmental protection agents that safeguard air and water purity and preserve food quality. Yara's global workforce of more than 8,000 employees represents great diversity and talent enabling Yara to remain a leading performer in its industry.www.yara.com