Netherlands-based Royal DSM N.V. (DSM) has reached an agreement to sell DSM Agro and DSM Melamine to Orascom Construction Industries (OCI) for EUR310 million on a cash and debt-free basis. The intended sale, which was announced on March 30, is expected to close in the second quarter, subject to regulatory and other customary approvals and notifications.
With the acquisition of DSM Agro, Egypt-based OCI will expand its customer base in northwestern Europe and offer a wider range of products, including urea, ammonia, calcium ammonium nitrate, UAN, and ammonium sulfate. “The acquisition of DSM Agro and DSM Melamine fits perfectly in our strategy to become among the global leaders in fertilizer production and distribution,” said Nassef Sawiris, chairman and CEO of OCI.
OCI will assume responsibility for the business results of DSM Agro and DSM Melamine from Jan. 1, 2010, forward. OCI said it fully supports DSM’s strategy and approach on the Chemelot site in Sittard-Geleen, Netherlands, where the main facilities of both business groups are located. With the acquisition of DSM Agro and DSM Melamine, OCI will become an indirect shareholder in Sitech Services B.V., where the company said it will make use of synergies in site and manufacturing services, and participate in infrastructural site investments.
DSM said the agreement with OCI is a major step in its effort to refocus the company on life sciences and materials science. DSM announced in September 2007 that DSM Agro and DSM Melamine no longer fit with the company’s strategic focus. Since 2008, both business groups had been in the company’s Base Chemicals and Materials cluster, together with a number of other businesses. DSM said the selling process for most of the remaining businesses in that cluster is underway.
DSM Agro and DSM Melamine combined employ 779 people. DSM Agro is a producer of ammonia and high-nitrogen fertilizer, with realized net sales of EUR338 million in 2009. Its Sittard-Geleen production site has annual production capacity of 1.6 million mt.
DSM Melamine is the world’s largest producer of melamine, and in 2009 posted net sales of EUR151 million. DSM Melamine has a plant in the Netherlands, and also produces melamine in joint ventures in China and Indonesia.
Company-wide, DSM has annual net sales of about EUR8 billion and employs some 22,700 people worldwide. In addition to its headquarters in the Netherlands, the company has locations on five continents.
DSM Chemicals North America Inc., a subsidiary of Royal DSM N.V. based in Augusta, Ga., is reportedly not involved in the sale and is unaffected by it. The company manufactures nitrogen-based fertilizers. Its products include ammonium sulfate, caprolactam, and nylon 6 polymer.
OCI is one of Egypt’s largest corporations, with projects and investments across Europe, the Middle East, and North Africa. The company directly employs more than 86,000 people. The OCI Fertilizer Group, one of two core business activities of OCI, is a strategic owner and operator of nitrogen fertilizer plants in Egypt and Algeria, with international distribution in Latin America, the U.S., Europe, and Africa.
With 2 million tons of nitrogen fertilizer capacity in Egypt, the OCI Fertilizer Group now ranks among the top 10 nitrogen-based fertilizer producers worldwide. In 2010/2011, the group plans to commission a 2 million-ton fertilizer complex in Algeria in partnership with state-owned Sonatrach. With this new production in Algeria, along with upgrades to the urea production facilities in Egypt and recently announced investments in ammonium sulfate and UAN production, the OCI Fertilizer Group said it will achieve an annual production capacity of approximately 5 million tons of nitrogen-based fertilizers.