The Scotts Miracle-Gro Co. has entered a definitive agreement to contribute Scotts LawnService in a joint venture with TruGreen Holdings Inc., an entity controlled by private equity firm Clayton, Dubilier & Rice (CD&R). At the closing of the transaction, ScottsMiracle-Gro will own an equity stake of approximately 30 percent in the combined business, with a fund managed by CD&R holding the controlling interest. Scotts said the combination of the two businesses would create a lawn service business with approximately 2.3 million customers and approximately $1.3 billion in revenue that is better equipped to bring innovation and improved service to the consumer and drive category growth.

Upon completion, the combined business will operate under the TruGreen brand and be based in Memphis, where TruGreen headquarters are located. David Alexander, TruGreen’s CEO, will lead the combined company. Jim Gimeson, president of Scotts LawnService, will join the combined company as chief operating officer. John Compton, a CD&R operating partner and former PepsiCo president, will continue to serve as TruGreen’s chairman.

In the event that the new combined company is eventually sold as part of a public offering, ScottsMiracle-Gro has the option to participate in such a process or to retain its minority ownership position. The company could also participate in a potential outright sale of the business to a third party or buy 100 percent of the combined entity through such a process at a later date. The proposed transaction is expected to close by the end of the second quarter of fiscal 2016 and is subject to satisfaction of customary closing conditions and the receipt of debt financing by TruGreen.

“We continue to believe the demographics and long-term trends remain extremely favorable related to the future of do-it-for-me lawn service,” said Scotts CEO and Chairman Jim Hagedorn. “But as we studied our options to capture those benefits, we concluded that our customers and shareholders would be best served by combining Scotts LawnService with TruGreen. Given the complexity of the transaction, as well as the relative value of the two businesses, it was equally clear the best way to make such a combination work was for us to take a minority position.

“This combination is structured in a way that gives us maximum optionality in the future. While it’s far too early to predict our future in the service industry, any decision made regarding this investment will be focused on what is in the best interest of our shareholders.”

Upon closing, ScottsMiracle-Gro expects to receive a cash distribution from the joint venture of approximately $200 million and plans to use those proceeds to fund other strategic investments. Those include: exploration of a possible European joint venture; likely investment in a live plants business; continued investment in hydroponic gardening businesses; and $100 million in share repurchase activity during fiscal 2016.

Scotts reiterated 2016 guidance of 4-5 percent sales growth and adjusted earnings per share of $3.75-$3.95. The guidance does not include the impact of a potential European transaction, investment in live goods, hydroponics or other possible transactions.

One contract worker was killed and another was taken to the hospital after an ammonia leak at CF Industries Holdings Inc.’s Medicine Hat, Alberta, nitrogen complex Dec. 7. The employees of Aluma Systems were weather-proofing a large ammonia tank at a time of the incident. It is believed that a piece of equipment struck a valve and caused the leak. The worker who went to the hospital was quickly released.

“We are deeply saddened by the death of a contractor who was working at the Medicine Hat Nitrogen Complex and our thoughts go out to the family, friends and coworkers of the individual who passed away,” a CF spokesman told Green Markets. “There is no ongoing hazard from the incident to employees, contractors or the community and the plant is operating normally outside of the incident site. We take the safety of everyone inside and outside the facility very seriously, and we will conduct a thorough investigation into the incident.”

Sadly, another contract worker was killed in an accident at CF’s construction site at Donaldsonville, La., Dec. 4.

Israel Chemicals Ltd. has signed a memorandum of understanding with LLNP (Lev Leviev Namibia Phosphates) for a joint venture to mine phosphates offshore Namibia. The MOU calls for the companies to set up a demonstration plant to test the technological aspects and the economic feasibility of the project. The cost of the demonstration plant is estimated at $30 to $50 million dollars. The timetable calls for completion of the technological and economic feasibility studies by 2020. Commercial mining and fertilizer production would begin in 2022 or 2023.

While work continues on BHP Billiton’s Jansen potash mine in Saskatchewan, the company has told the Canadian press that it plans to cut 76 jobs at the operation, citing lower commodity prices. However, while the company is concerned over near term commodity prices, it remains bullish as to demand growth. The company is also facing, along with mining partner Vale SA, a $5.2 billion lawsuit in Brazil as a result of a recent dam collapse (GM Dec. 7, 2015).

The European Commission today approved plans by CF Industries Holdings Inc. to acquire North American and certain European assets of OCI NV. However, the deal has recently been called into question due to new U.S. Department of Treasury rules pertaining corporate inversions. However, the companies said last month they are jointly evaluating options to address the rules. This evaluation includes exploring alternative structures for the combination, such as using a parent company in The Netherlands rather than one in the United Kingdom, to accommodate the requirements of the Treasury notice.

A contractor was killed in an accident at CF Industries Holding Inc.’s construction site at Donaldsonville, La., Dec. 4.

Sulzer Chemtech, his employer, issued a statement saying it was deeply saddened by the news. "We offer our deepest sympathies to the family members of our lost colleague and friend. We are committed to offering our full support and assistance to family members to assist them in their time of need. Sulzer Chemtech is presently investigating the facts surrounding this event."

According to the local press, the employee was found at the bottom of a completed tower that was over 100 feet high. More details as to how the accident happened were not available.

While work was reported to have immediately stopped in the vicinity of the accident, which was near a new nitric acid plant, construction continued at the rest of the site. All construction resumed Dec. 5.

Yara International ASA has signed an agreement to acquire the assets of West Sacramento Nitrogen Operations from Agrium for a purchase price of $27 million. Yara will utilize the location as an import terminal for finished products, optimizing the site within the total footprint of Yara’s West Coast operations. The transaction is expected to close by the end of 2015, pending satisfaction of customary legal conditions.

Yara said the acquisition underlines its commitment to better serve the needs of agricultural communities on the West Coast placing the company in a better position to supply a growing customer base in the region.

"Yara has a proud, 65-year long history of doing business in California. As the world’s largest producer of mineral fertilizer, we believe strongly in the prospects of California’s farmers and retailers. This planned acquisition emphasizes our commitment to the region’s agricultural market," said Business Unit Manager, Jørgen Arentz Rostrup of Yara North America.  

The West Sacramento terminal will provide Yara with greater market access to Northern California and its intensive agricultural market. The newly-acquired site will be used as an import terminal for finished products and complements Yara’s terminals in San Diego, Stockton and Port Hueneme. The logistical advantages of this strategically important asset will improve Yara’s customer service, reduce truck transit times, conserve fuel and enhance overall logistical efficiencies.

"We believe that our broad portfolio of value-adding crop nutrients and commodities are well-suited to meet the needs and challenges faced by California’s agricultural communities," said Rostrup. "Yara is committed to helping North American farmers improve crop yields, crop quality and crop profitability."

The newly acquired terminal will increase the company’s storage capacity, allowing for a continuous, predictable, year-round product supply and limiting the chances of product shortages. Greater storage capacity will also improve product flow at Yara’s other California-based locations, especially during the busy peak seasons. A reliable, consistent and long-term supply of fertilizers is important for Yara’s retail customers.

"Yara looks forward to growing its presence in the California market and to enhancing service to this very important agricultural region for years to come," said Rostrup.

Gazprom Sulphur LLC has responded to PhosAgro media statements last week that the phosphate producer had been forced to suspend part of its mineral fertilizer production at the Balakovo branch of OJSC Apatit due to Gazprom Sulphur’s failure to fulfil its contractual obligations (GM Nov. 30. p.13). In an emailed statement to Green Markets, Gazprom Sulphur’s press office said the company is fulfilling its contractual obligations for the supply of liquid sulfur to Apatit, and that for more than five months in 2015, shipments of liquid sulfur to Apatit "exceeded the monthly contractual volume by some 18 percent".

"OJSC Apatit regularly requests additional volumes, but the ability to supply additional volumes to the company is limited by the shortage of specialized railcars for the transport of liquid sulfur on the Russian market," Gazprom Sulphur said. The Gazprom unit said that it also is meeting its monthly agreed liquid sulfur shipment volumes to PhosAgro Cherepovets. The sulfur supplier added that there is enough liquid sulfur available for all consumers, but there are not enough specialized railcars to transport the full quantity needed by Russian buyers. It said some consumers have purchased the additional specialized railcars for liquid sulfur carriage and "solved their problems that way." Gazprom Sulphur said it has informed the Russian government of its position.

Israel’s National Planning commission has given Israel Chemicals Ltd. the green light to proceed with mining operations at Sde Barir in the Negev. The commission rejected opposition from Israel’s Health Ministry, environmental groups and residents of the nearby town of Arad. ICL welcomed the decision.

The commission said that phosphates are a valuable natural resource for the Israeli economy in general and for employment in the Negev region in particular. The commission said in its statement on Tuesday that it heard various positions and was persuaded that phosphate mining did not represent an unacceptable health hazard in comparison with other infrastructure projects.

ICL had said that without Sde Barir the company would be forced to close its phosphate and fertilizer operations in Israel in less than ten years.

Prices in the Indian Potash Ltd. urea tender that closed Saturday, Nov. 28, showed a drop of $8/mt in prices from the previous STC tender. A majority of the offers were below $260/mt CFR, with the lowest offers at $254-$255/mt CFR for West Coast deliveries and $255-256/mt CFR for East Coast ports.

The prices reflect a netback in the mid-to-upper $240s/mt FOB for Chinese product. Chinese producers were arguing right up to the last minute they would not support any awards that reflected a netback below $250/mt FOB.

All told, 28 companies offered slightly more than 3 million mt in firm offers. An additional 240,000 mt was offered as optional tonnage. The Indian buyer should issue its counter bids based on delivery ports by Monday, Nov. 30. Details of the tender will be available in the Dec. 7, 2015 issue of Green Markets.