Oslo-based Yara International ASA announced Oct. 5 that it has reached an agreement with the Galvani family to acquire the remaining minority interest in Brazilian fertilizer producer Galvani Indústria, Comércio e Serviços SA. Yara now owns 100 percent of the shares of Galvani Indústria, having purchased a 60 percent stake in the company back in 2014 (GM Aug. 11, Dec. 8, 2014).
“This deal streamlines our production footprint in Brazil, securing full ownership of key Yara Brazil production assets, complementing its extensive distribution capabilities and achieving a more integrated position in the Brazilian market,” said Lair Hanzen, executive vice president, Yara Brazil.
The deal gives Yara 100 percent ownership of Galvani Indústria’s industrial unit in Paulínia, São Paulo, which has integrated Single Super Phosphate (SSP) production and a fertilizer bulk blend facility. Yara will also own the Serra do Salitre project in Minas Gerais, which has annual production capacity of approximately 1.2 million mt of phosphate ore and 1.5 million mt of SSP equivalent finished fertilizers.
Yara said the agreement includes a cash payment to the Galvani family of US$70 million over a three-year period from closing, and a conditional future payment related to project success. As part of the deal, Yara said certain assets will be transferred to the Galvani family, who will also receive a payment in cash and a contingent amount.
The production unit in Luis Eduardo Magalhães and the mining units in Angico dos Dias and Irecê, as well as the Santa Quitéria greenfield phosphate project, will be separated out from Galvani Indústria and will be fully controlled by a new company managed by the Galvani family. The carved-out assets transferred to the Galvani family have a book value equivalent to US$95 million as of Aug. 31, 2018.
Yara said the transaction is subject to conditions precedent that still need to be met, as well as the approval of the Brazilian antitrust authorities (CADE) and other common approvals.
Galvani was founded in the 1930s as a beverage industry and transportation company in Brazil, but branched out into fertilizer distribution in the 1960s and 1970s. The company’s Paulínia complex opened in the 1980s as one of Brazil’s largest fertilizer production sites, with capacity for sulfuric acid and SSP, as well as granulation, blending, and bagging. This was followed in the 1990s with a liquid and SSP facility in western Bahia.
Galvani has a total SSP production capacity of approximately 1 million mt/y through the industrial complex of Paulínia and Luis Eduardo Magalhães. The company’s units in São Paulo, Minas Gerais, Bahia, Mato Grosso, and Ceará employ approximately 1,800 people.
Yara has been steadily expanding its footprint in Brazil. Earlier this year (GM May 11, p. 1), the company’s $255 million acquisition of the Vale Cubatão Fertilizantes complex from Vale SA, Rio de Janeiro, was approved by CADE. Yara’s deal with Vale was first announced in November 2017 (GM Nov. 22, 2017).