Yara International ASA said Sept. 21 that it has received clearance from the European Commission to acquire Kemira GrowHow Oyj, and will waive the remaining preconditions for its tender offer.
“The approval from the European Commission paves the way for the further development of a world-class company. Kemira GrowHow’s phosphate and Yara’s nitrogen activities will serve as a solid platform for the future and further position the company as a knowledge leader in the global fertilizer industry, known for its broad portfolio and balanced fertilization,, says Thorleif Enger, Yara president and CEO.
The European Commission approval is subject to certain conditions that Yara International ASA is committed to fulfill within six months. Yara said these commitments correspond to less than 3 percent of Kemira GrowHow Oyj revenues. They include:
- Divestment of part of Yara’s nitrogen chemicals business in Köping, Sweden
- Divestment of part of Kemira GrowHow’s nitrogen chemicals business in Tertre, Belgium
- Dissolution of the Fertisupply distribution joint venture in Denmark
- Sale of Yara’s share in the Zemnor distribution joint venture in Latvia
- Divestment of the CO2 liquefaction plant in Billingham, UK, currently owned and operated by the newly established joint venture GrowHow UK Ltd.
Yara expects its tender offer for Kemira shares to be complete in October.
Kemira GrowHow Oyj is one of the leading producers of fertilizers and feed phosphates in Europe, with production facilities in 8 countries, sales to over 100 countries, and about 2,500 employees. At the date of this release, the members of the Kemira board of directors are Ossi Virolainen (Chairman), Lauri Ratia (Vice-Chairman), Arto Honkaniemi, Satu Raiski, Helena Terho, Esa Tirkkonen, and Maija Torkko. The CEO of Kemira GrowHow Oyj is Heikki Sirviö. The members of the board of directors will be replaced following the completion of the tender offer.
For the year ended Dec. 31, 2006, Kemira reported net sales of EUR 1,166.2 million, operating profit of EUR 11.1 million, a net loss after minority interest of EUR 7.8 million, and total assets of EUR 844.7 million. For the six months ended 30 June 2007, Kemira reported net sales of EUR 682 million, operating profit of EUR 38.9 million, net income after minority interest of EUR 28.3 million, and total assets of EUR 868.2 million.
Yara said phosphate rock mining, phosphoric acid, and finished products at Siilinjärvi and Uusikaupunki in Finland will be important additions to Yara’s phosphate-related capabilities and represent new capacity within Yara. Yara is interested in opening the Sokli mine in Finnish Lapland and exploring the commercial utilization of the phosphate raw material extracted from the mine, if a commercially sustainable means of implementation can be found. Kemira’s phosphate mining and primary upgrading operations in Finland will provide new competencies to the combined company, complementary to Yara’s existing operations.
Yara noted that both companies have streamlined their operations during the last ten years. The combination creates new opportunities for value creation through further synergies and growth.
Yara says that based on 2006 reported financials, the acquisition of Kemira will increase Yara revenues and assets by approximately 21 percent and 20 percent, respectively. Kemira will be consolidated into Yara’s fourth-quarter 2007 results. The impact on Yara’s third-quarter 2007 results will not be material.
Subject to the agreement by and between Yara and the relevant individuals, the CEO, CFO, and other members of the senior management of Kemira who will reach retirement age prior to 2010 will continue their respective service relationship with the combined company in a combination of active assistance in the transition, followed by engagement in a consultancy capacity at the present compensation level until eligible for pension at the age of 60.