EuroChem Group AG, Zug, Switzerland, on March 28 closed the deal to buy a controlling 51.48 percent stake in Brazilian fertilizer distributor Fertilizantes Heringer SA, Viana, EuroChem announced in a statement.
A EuroChem subsidiary, EuroChem Comércio de Productos Químicos Ltda., and Heringer Participações Ltda.(controlled by the Heringer family and Fertilizantes Heringer’s controlling shareholder), signed an agreement for the acquisition last December (GM Dec. 31, 2021).
The deal is valued at R$554.56 million (approximately US$116.4 million at current exchange rates), half of which is being paid in cash in Brazilian currency at closing, according to a Fertilizantes Heringer statement.
An Extraordinary Shareholders Meeting was to be held on March 31 to appoint a new Board of Directors and a Management Board of Fertilizantes Heringer.
As per Brazilian Corporation Law, EuroChem Comércio de Productos Químicos will now carry out a public “Tag-Along” tender offer for the acquisition of Fertilizantes Heringer’s remaining shares from other shareholders in the company at the same price it paid for the 51.48 percent stake.
EuroChem also said at the time of the acquisition agreement that it may consider delisting Heringer as part of the “Tag-Along” offer, a move permitted under Brazilian Corporation Law.
But the Zug-based fertilizer group made no comment in its March 28 statement on further share purchases or on the potential delisting.
According to the last update (June 1, 2018) of Fertilizantes Heringer’s ownership breakdown on the Brazilian company’s website, OCP SA via Netherlands-registered OCP International Cooperatieve U.A. owned a 10 percent stake in the company, and Nutrien Ltd. a 9.5 percent interest. The identities of the owners of the remaining 29.02 percent of Fertilizantes Heringer were not listed, but are known to include some funds.
EuroChem founder and main beneficiary Russian billionaire Andrey Melnichenko resigned from the EuroChem Group Board and withdrew as a main beneficiary on March 9 after he came under European Union sanction (GM March 11, p. 1 & p. 34). Melnichenko, until March 9, had controlled 90 percent of the EuroChem Group.
Fertilizantes Heringer has 14 storage, blending, and distribution units in Brazil, and is the country’s fourth-largest distributor in terms of installed capacity, at more than 4 million mt/y. Eleven of the company’s blending units are in operation, with one idled unit expected to restart late this year (see separate story).
The Head of EuroChem’s Commercial Division in South America and CEO of EuroChem Fertilizantes Tocantins, Lieven Cooreman, said the acquisition further strengthens the EuroChem Group’s production and distribution capabilities in Brazil.
“The conclusion of this agreement reinforces the EuroChem Group’s commitment and investment in Brazilian agribusiness, allowing the company to serve its customers better and offer a complete fertilizers line from North to South,” he said.
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 2021, it announced the purchase of the Serra do Salitre project (GM Sept. 10, 2021; Aug. 6, 2021) in Minas Gerais, which will add about 1 million mt/y of phosphate production by 2024.
A deal for Uralkali PJSC and Uralchem JSC to acquire control of Fertilizantes Heringer bit the dust in late 2019, just days after Brazil’s antitrust regulator approved the deal “without restrictions” (GM Jan. 10, 2020; Jan. 3, 2020). Fertilizantes Heringer blamed Uralkali for the failure of the deal (GM Feb. 14, 2020).
The parties had signed a binding letter of intent in September 2019 for the acquisition (GM Sept. 27, 2019).
As per the Extraordinary Shareholders Meeting on March 31 to appoint a new Board of Directors and a Management Board of Fertilizantes Heringer, the new Board is now comprised of seven members.
Kuzma Marchuk, EuroChem CFO, has been appointed Chairman of Fertilizantes Heringer’s Board, and Lieven Cooreman, Head of EuroChem’s Commercial Division in South America and CEO of EuroChem Fertilizantes Tocantins, has been appointed the new Vice-Chairman of the Board, as well as Fertilizantes Heringer’s CEO.