EuroChem Group AG, Zug, Switzerland, has announced the signing by one of its subsidiaries of an agreement to purchase a controlling 51.48 percent share in Brazilian fertilizer distributor Fertilizantes Heringer SA, Viana, further strengthening the group’s production and distribution capabilities in Brazil.
Fertilizer Heringer has 14 storage, blending, and distribution units in the southeast, midwest, south, and northeast regions. It is the country’s fourth-largest distributor in terms of installed capacity, at more than 4 million mt/y.
The transaction price was R$554.6 million (US$97.4 million), or about R$20 per share (US$3.51). Half will be due at the closing date. Once the deal is complete, tagalong rights for the remaining shareholders will come into play, and EuroChem will tender to buy their shares at the same price.
EuroChem said it may consider delisting the company as part of the tagalong offer. At last report, Nutrien Ltd. and OCP SA both owned about 10 percent of Heringer. The Heringer family controlled the 51.48 percent sold to EuroChem.
The transaction is EuroChem’s third in Brazil in the past five years. In 2020, it bought the remaining stake in Fertilizantes Tocantins (FTO) (GM Aug. 21, 2020), which distributes about 4 million mt/y of fertilizer in the country. In August, it announced the purchase of the Serra do Salitre project (GM Aug. 6, p. 1, Sept. 10, p. 1) in Minas Gerais, which will add about 1 million mt/y of phosphate production by 2024.
“This acquisition, following antitrust approval, will enable EuroChem to better serve the total market of Brazil – from north to south – even more reliably, while providing more outlets for our full product line of standard and premium fertilizers,” said EuroChem Group Global Head of Sales and Distribution Charles Bendaña.
“It will also help the EuroChem Group to achieve higher efficiency in our shipping and logistics programs in order to provide reduced costs to our customers in Brazil, as well as increased netbacks to our global production facilities,” he continued. “Taken with the recent full acquisition of Fertilizantes Tocantins SA and the ongoing purchase of the Serra do Salitre phosphates project, this move will help anchor the group as a leader both locally and abroad.”
“With Heringer joining a South America distribution base that already includes EuroChem Fertilizantes Tocantins in Brazil and EuroChem Emerger Fertilizantes in Argentina, this deal, once approved, will cement EuroChem’s reputation as the crop nutrient supplier of choice across great swathes of the continent,” said Lieven Cooreman, EuroChem FTO CEO and Head of EuroChem’s Commercial Division in South America. “This naturally gives our customers added confidence in our ability to cater to any crop on any farm in a timely manner.”