Agrico Canada Ltd. announced last week that its two-year partnership (GM June 2, 2008) with Yara International ASA has ended. Yara acquired 25 percent of Agrico two years ago, and according to Agrico, Yara had the option to buy the remainder at the end of August 2010.
Agrico said Yara is backing away from the deal and is exercising a put option that will require the Agrico shareholders to buy back Yara’s 25 percent stake.
“This news, while somewhat disappointing, does not change Agrico’s commitment to its customers and joint venture partners,” said R.L. “Bob” Whitelaw, Agrico president. “My understanding is the main reason for the cancellation of the deal is that Yara has set a new course for their core business, to be production oriented. We are satisfied this change in direction has nothing to do with what Agrico did or didn’t do that led Yara to this decision.”
“In May of 2008, Yara purchased a 25 percent share in Agrico Canada Ltd. The new partnership was aimed at strengthening the supply relationship between the two companies, allowing both a more solid platform for growth and the ability to focus on value added services,” Pete Valesares, president of Yara North America, told Green Markets. “Since this important investment, Yara acquired Saskferco, providing significant Western Canadian nitrogen production, and Agrico met its goal of creating joint venture partnerships with its company-owned retail centers. Now, as both companies focus on their strategic plans for the future, at Yara’s request, Agrico will repurchase Yara’s shares, thereby ending Yara’s term as an investor in Agrico Canada Ltd.”
“Yara greatly appreciates Agrico’s willingness and subsequent dedication to the investment,” added Valesares. “Although the formal partnership will soon be coming to an official end, both companies look forward to maintaining and advancing the improved relationships that resulted.”
Agrico said it will focus on the future and continue its commitment to strengthen its relationships with members of its Crop Care network, joint venture partners, and dealer customers. “For Agrico, it is business as usual as we continue to work to offer excellent service, products, and technology transfer to our many customers,” said Whitelaw. “While we are disappointed that Yara has chosen to change direction, it will not affect how we, at Agrico, conduct our business and continue to maintain our excellent working relationship with Yara.”
Agrico, which has been supplying fertilizer to the Canadian market since 1931, has grown to include a network of company-owned farm centers and joint venture partnerships. It also operates a network of warehouses for dry and liquid product across Canada and in St. Paul, Minn.
Yara has liquid and dry fertilizer terminals at Montreal and Contrecoeur, Que., respectively, that service Eastern Canada and the Northeast U.S. At the time the Agrico-Yara partnership was announced, the companies said Yara’s strong eastern presence would be an excellent fit with the facilities and resources that Agrico utilizes in Ontario and Western Canadian markets. The companies said the deal would provide an improved fertilizer import position and enhance operational efficiency. The partners noted that they had complementary flagship terminals at Hamilton, Ont. (Agrico) and Contrecoeur, Que. (Yara). In 2008, Agrico’s storage capacity was put at 235,000 mt, and 2007 revenues were listed as C$160 million.
Soon after the Agrico-Yara deal was announced in 2008, Yara went on to enhance its position as the world’s largest nitrogen producer by buying the Belle Plaine, Sask., nitrogen plant owned by The Mosaic Co. and Investment Saskatchewan (GM July 21, 2008).