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Yara set to complete acquisition of Kemira GrowHow Oyj

News

Yara International ASA said Sept. 21 that it has received clearance from the European Commission to acquire Kemira GrowHow Oyj, and will waive the remaining preconditions for its tender offer.

“The approval from the European Commission paves the way for the further development of a world-class company. Kemira GrowHow’s phosphate and Yara’s nitrogen activities will serve as a solid platform for the future and further position the company as a knowledge leader in the global fertilizer industry, known for its broad portfolio and balanced fertilization,, says Thorleif Enger, Yara president and CEO.

The European Commission approval is subject to certain conditions that Yara International ASA is committed to fulfill within six months. Yara said these commitments correspond to less than 3 percent of Kemira GrowHow Oyj revenues. They include:

  • Divestment of part of Yara’s nitrogen chemicals business in Köping, Sweden
  • Divestment of part of Kemira GrowHow’s nitrogen chemicals business in Tertre, Belgium
  • Dissolution of the Fertisupply distribution joint venture in Denmark
  • Sale of Yara’s share in the Zemnor distribution joint venture in Latvia
  • Divestment of the CO2 liquefaction plant in Billingham, UK, currently owned and operated by the newly established joint venture GrowHow UK Ltd.

Yara expects its tender offer for Kemira shares to be complete in October.

Kemira GrowHow Oyj is one of the leading producers of fertilizers and feed phosphates in Europe, with production facilities in 8 countries, sales to over 100 countries, and about 2,500 employees. At the date of this release, the members of the Kemira board of directors are Ossi Virolainen (Chairman), Lauri Ratia (Vice-Chairman), Arto Honkaniemi, Satu Raiski, Helena Terho, Esa Tirkkonen, and Maija Torkko. The CEO of Kemira GrowHow Oyj is Heikki Sirviö. The members of the board of directors will be replaced following the completion of the tender offer.

For the year ended Dec. 31, 2006, Kemira reported net sales of EUR 1,166.2 million, operating profit of EUR 11.1 million, a net loss after minority interest of EUR 7.8 million, and total assets of EUR 844.7 million. For the six months ended 30 June 2007, Kemira reported net sales of EUR 682 million, operating profit of EUR 38.9 million, net income after minority interest of EUR 28.3 million, and total assets of EUR 868.2 million.

Yara said phosphate rock mining, phosphoric acid, and finished products at Siilinjärvi and Uusikaupunki in Finland will be important additions to Yara’s phosphate-related capabilities and represent new capacity within Yara. Yara is interested in opening the Sokli mine in Finnish Lapland and exploring the commercial utilization of the phosphate raw material extracted from the mine, if a commercially sustainable means of implementation can be found. Kemira’s phosphate mining and primary upgrading operations in Finland will provide new competencies to the combined company, complementary to Yara’s existing operations.

Yara noted that both companies have streamlined their operations during the last ten years. The combination creates new opportunities for value creation through further synergies and growth.

Yara says that based on 2006 reported financials, the acquisition of Kemira will increase Yara revenues and assets by approximately 21 percent and 20 percent, respectively. Kemira will be consolidated into Yara’s fourth-quarter 2007 results. The impact on Yara’s third-quarter 2007 results will not be material.

Subject to the agreement by and between Yara and the relevant individuals, the CEO, CFO, and other members of the senior management of Kemira who will reach retirement age prior to 2010 will continue their respective service relationship with the combined company in a combination of active assistance in the transition, followed by engagement in a consultancy capacity at the present compensation level until eligible for pension at the age of 60.

Mosaic holds closed-door meetings with counties

Florida, News Briefs

Sarasota, Fla.-The Mosaic Co. plans to hold a series of meetings in secret with representatives from three counties and the local water authority in an effort to resolve issues regarding future mining activities and permitting. Mosaic spokesman David Townsend said the meeting is not really secret because the fact it was to occur appeared in local newspapers, “so how secret can it be?” Florida’s “Sunshine Law” prohibits all government bodies from meeting in secret, but since only one representative from each county commission will be present, the law will not apply. However, if a settlement of the issues is reached, all of the transcripts of the meetings must be made public. The three counties include Charlotte, which has led the battle against the southerly advance of phosphate mining, and Lee and Sarasota, as well as the Peace River/Manasota Regional Water Supply Authority. The representative from Sarasota County will also speak for the water authority. In the past, the counties have contested Mosaic’s applications for permits to mine in the region out of fear the quantity and quality of the Peace River, which supplies the area with potable water, would be affected. Mosaic would like to have related issues resolved to move more quickly in the permitting process. “We’ve been negotiating and in litigation for over five years, and we want a global settlement of the issues,” Townsend said. “It has been moving slowly, and we thought it could move at a much faster pace with fewer people at the table.” After the first meeting on Sept. 27, Townsend described it as “very productive,” but added they would continue to meet and, “This is not the end.”

Mosaic prepays $300 M of term loans

News Briefs, Northern Plains

Plymouth, Minn.-The Mosaic Company said Sept. 25 that it is notifying the lenders under its senior secured bank credit facility of its election to prepay $300 million principal amount of term loans under the facility on Sept. 28, 2007. With this payment, Mosaic will have prepaid $700 million in the past five months. The prepayments will consist of $112.8 million principal amount of term loan A-1 borrowings and $174.3 million principal amount of term loan B borrowings by Mosaic, and $12.9 million principal amount of term loan A borrowings by its subsidiary, Mosaic Potash Colonsay ULC. After the prepayments, outstanding term loans under the facility will be reduced to $15.1 million principal amount of term loan A borrowings, $132.0 million principal amount of term loan A-1 borrowings, and $203.9 million principal amount of term loan B borrowings. The prepayments are being made from available cash generated by the ongoing business operations of Mosaic and its subsidiaries. Mosaic considers the prepayments to be a significant step in its plan to reduce outstanding borrowings, strengthen its balance sheet, and achieve investment grade credit ratings.

Uralkali says no specific risk to potash mines

News Briefs, Potash, Russia

Berezniki, Russia-Uralkali reports that a new study finds that no specific flooding or mining risk exists in any of its mines under operation. Uralkali’s existing mines are Mine 2 and Mine 4. The study was commissioned after the flooding of Mine 1, which occurred about a year ago (GM Oct. 30, 2006, p. 9). The assessment has been conducted in conjunction with a third party industry expert, Ercosplan. The German-based firm is a leading potash and other mineral salt specialist, with extensive expertise in geology, rock mechanics, mining, and processing, as well as environmental issues. Ercosplan said there is a general risk of flooding that exists due to the inherent water solubility of the host rock, but that this is common with all potash mines.

Viterra announces change of ticker symbol

Canada, News Briefs

Regina-Viterra Inc. has announced that its common shares will begin trading, under the symbol VT, on the Toronto Stock Exchange (TSX) effective Sept. 28, 2007. The ticker symbol change follows the completion of Saskatchewan Wheat Pool’s launch of its new business name on Aug. 30, 2007, following the acquisition of Agricore United in June. The company will continue as Saskatchewan Wheat Pool Inc. operating as Viterra until the formal name change to Viterra Inc., which is expected to take place in March 2008.

Saipem sells stake in Haldor Topsoe

Europe, News Briefs

Milan, Italy-Saipem, as part of its announced plan to dispose of noncore assets, reports that it has sold its 50 percent interest in Haldor Topsoe A/S to Mr. Haldor Topsoe, for a total value of 340 million euro. Mr. Topsoe already holds the remaining 50 percent interest in the company. Saipem and Haldor Topsoe A/S will continue their long-term commercial relationship, notably in the areas of ammonia and fertilizer.

TerraCycle and Scotts settle product suit

News Briefs, Northeast

Trenton, N.J.-Tiny TerraCycle Inc., which uses worm droppings to produce liquid gardening fertlizer that is then marketed in recycled plastic bottles, has settled a product infringement suit brought by fertilizer giant The Scotts Co., both sides have reported. Scotts officials indicated they were pleased with the terms, including TerraCycle not making any more superiority claims, such as that independent tests prove their products out-perform MiracleGro, and agreeing to phase out the MiracleGro green and yellow combination in its packing. “We recognize that Scotts filed this lawsuit based on a legitimate need to uphold the accuracy of advertising claims and protect its trademark rights,” said TerraCycle founder and CEO Tom Szaky. “We also regret certain statements that were made about Scotts in the heat of litigation. Now that the parties have resolved their differences, TerraCycle is looking forward to providing consumers with an array of garden and lawn care products in the marketplace.” But TerraCycle doesn’t regard the settlement as a total loss. “Indeed, we view it as a minor victory,” reported spokesman Albe Zakes, who worked to get press coverage characterizing the suit as David against Goliath. Zakes said since the Scotts action TerraCycle has added two new programs for recycling plastic bottles and has five new products coming out between now and early spring. “The time had come, however, to put this revenue strain behind us. So we are pretty pleased with the outcome.” “Scotts is pleased to resolve this case and believes that the settlement serves the public’s interest in ensuring the accuracy of advertising claims, as well as protection of the valuable MiracleGro brand,” said Scotts spokesman Jim King.

Monsanto gains Evogene N gene technology

News Briefs, Nitrogen, Western Cornbelt

St. Louis, Mo.-Monsanto Co. has announced the acquisition of gene technology from Evogene Ltd. of Tel Aviv that the two companies say will improve nitrogen use efficiency in corn, soybeans, canola, and cotton. In an agreement with Evogene, Monsanto gains exclusive rights to genes discovered by Evogene that help plants maintain yield with less nitrogen. Monsanto will work to evaluate the use of those genes, along with nitrogen utilization genes already in testing. The financial terms of the agreement were not disclosed. “Improving nitrogen use efficiency in crops has immense value, not only for farmers but also for our environment,” said Fred Below, professor of crop physiology at the University of Illinois. “These improvements provide the greatest opportunity for increased profitability, while also offering a new way to reduce the environmental impact of corn production.” Steve Padgette, Monsanto vice president of biotechnology, added, “Monsanto is continually innovating new technologies to help farmers get more out of every seed and to do more with less, including maximizing the nitrogen efficiency of crops. We look forward to working with Evogene to continue delivering valuable products to farmers’ fields that reduce agriculture’s impact on the environment.”

Compass to boost salt capacity

News Briefs, Southern Plains

Overland Park, Kan.-Compass Minerals said Sept. 24 that it plans to continue expansion of production capacity at its primary rock salt mine at Goderich, Ont., in order to meet projected long-term demand for highway deicing salt in the Great Lakes region. “This expansion, which would add approximately one million tons of annual production capacity, is part of our previously announced multi-phased strategy to meet demand growth in the core Great Lakes region we serve,” said Angelo Brisimitzakis, Compass Minerals’ president and CEO. “While demand for highway deicing salt fluctuates with the severity of winter weather, there is good underlying long-term growth in the Great Lakes region. This added capacity will enable us to meet this increased demand as it occurs over the next decade.” When this expansion is completed, the total annual capacity of the Goderich mine ?Çô already the largest salt mine in the world ?Çô is expected to be approximately 8.25 million tons per year. The one million ton expansion is expected to come online during 2009, with full availability starting in 2010. Compass Minerals’ multi-phase strategy also encompasses a 750,000 ton capacity expansion, announced last year and scheduled to be fully operational in 2008, and the installation of a new state-of-the-art screening mill that became operational this year. The capital cost of the just announced expansion is expected to be approximately $15 million over the next two years. The bulk of the investment is for the purchase and installation of additional hoisting equipment that will enable more salt to be brought to the surface. When the expansion is fully operational and the additional capacity is needed, total employment at the Goderich site will increase by about 50 jobs from its current level of more than 400. Compass Minerals currently has the capacity to produce approximately 6.5 million tons of rock salt at the mine in Goderich, Ontario, 2.8 million tons at its mine in Cote Blanche, Louisiana, and 2.0 million tons at its mine in Cheshire, U.K., making it the largest supplier of deicing salt in the world.