CF Industries Holdings Inc. (CF) said Jan. 6 that it has entered into a definitive agreement to sell four mainly dry product warehouses and related assets to Growmark Inc., Bloomington, Ill., and one of its subsidiaries.
CF said that over a number of years its throughput utilization of these facilities has declined significantly, as an increasing portion of the company’s dry product volume has been shipped directly to customers from manufacturing locations.
Terms of the deal were not disclosed. CF did say the price was a good valuation, reflective of the quality of the facilities. The transaction is expected to close in January.
“These are great facilities that support seasonal distribution patterns for dry fertilizers,” said Bert Frost, CF’s vice president, sales and marketing. “This transaction recognizes the high value placed on these assets by a wholesale organization that can utilize them better to serve farmers and retailers.”
CF said its distribution facilities will continue to focus on their strong positions in storage and timely delivery of ammonia and UAN. In addition, the company’s dry products warehouse in the Minneapolis/St. Paul area will continue to play an important role in staging dry fertilizers for seasonal delivery.
The facilities, located in Albany and Mapleton, Ill., and St. Louis, Mo., will be used by Growmark to serve the needs of the organization’s retail customers that provide fertilizer to farmers. A Growmark subsidiary will purchase the Cincinnati, Ohio terminal, also currently owned by CF. Storage capacities are: Albany 36,500 st all dry, Mapleton 61,000 st all dry, St. Louis (Bussen spur) 39,000 st all dry, and Cincinnati 30,000 st liquid and 60,000 st dry.
Growmark said the terminals are all strategically located, and will allow it the ability to efficiently source plant food by barge and load out to railcars or truck. The size and scope of the facilities will further enhance Growmark’s capability to make large scale purchases of both domestic and offshore fertilizer production. It said the terminals are widely recognized for being well maintained, with customer service teams known for providing outstanding service. The acquisition will increase the terminal storage base from which Growmark can continue to pursue its growth plans by providing additional truck outlets along with the ability to economically reach extended rail delivery points.
“This acquisition supports Growmark’s strategy to grow in and from its core businesses,” said Jim Spradlin, Growmark vice president, Agronomy. “We have been sourcing fertilizer to enable optimal crop production for more than 80 years. Providing a reliable supply of products when and where our retailer customers need them is essential to our success as a plant food supplier. As we continue to pursue our growth goals, having strategically located supply points is imperative. This opportunity improves our supply and service capabilities, while bringing increased efficiency to our plant food operations.”
Overall, Growmark said the acquisition represents approximately 226,000 tons of dry and liquid plant food storage. CF confirmed that the Cincinnati facility includes liquid capacity currently used for UAN. CF intends to lease at least a portion of that capacity. The company said that because the net result is a “no change” in the near-term, it chose not to mention it in its initial release about the transaction.
“We will remain proactive in pursuing acquisitions and joint ventures that support our growth and service goals,” said Rod Wells, Growmark director, agronomy sales and operations. “This is the case over our entire service geography, from Colorado to the East Coast.”
Growmark has been a major shareholder in CF. Former Growmark CEO Bill Davisson, who retired Jan. 3 from Growmark (GM Nov. 8, 2010), remains on the CF board. CF said it does not consider him a fully independent board member yet because he still has equity compensation arrangements with Growmark.
Growmark is a cooperative providing agriculture-related products and services, as well as grain marketing, in 31 states and Ontario, Canada. Growmark owns the FS trademark that is used by affiliated member cooperatives.
