OCI NV and CF Industries Holdings Inc. today announced that they have entered into a definitive agreement to combine OCI’s North American, European and Global Distribution businesses with CF’s global assets in a transaction valued at approximately US$ 8 billion, based on CF’s current share price, including the assumption of approximately US$ 1.95 billion in net debt. Upon completion of the transaction and based on current share prices, OCI will receive shares equal to a fixed 25.6 percent of the combined group and an additional US$1,208 million of consideration to be paid in a mix of cash and shares. Greg Heckman, currently a member of the board of directors of OCI and former president and CEO of The Gavilon Group LLC and Alan Heuberger, senior manager at Bill & Melinda Gates Investments (BMGI), will join the board of directors of the combined entity. The proposed transaction was unanimously approved by the boards of both companies, but will still require shareholder approval. It is expected to close in 2016.
A merged CF Industries Holding Inc. and OCI NV will have its headquarters in the U.K. CF will become a subsidiary of a new holding company domiciled in the U.K. where CF is the largest fertilizer producer following its recent acquisition of GrowHow.
The transaction includes OCI’s nitrogen production facilities in Geleen, Netherlands, and Wever, Iowa, and the company’s interest in an ammonia and methanol complex in Beaumont, Texas, along with its global distribution business based in Dubai, United Arab Emirates. The combined entity will also purchase a 45 percent interest plus an option to acquire the remaining interest in OCI’s Natgasoline project in Texas, which upon completion in 2017 will be one of the world’s largest methanol facilities. On a combined basis the company will have production capacity of approximately 12 million nitrogen-equivalent nutrient tons by mid-year 2016.
Not mentioned in the OCI and CF press releases were OCI assets in Egypt and Algeria.
"This is a terrific opportunity for the shareholders of both companies, with mid- to high-teens cash flow accretion," said Tony Will, CF president and CEO. "This is also a great outcome for U.S. farmers as we have another supply point that will ensure our critical products are delivered reliably and in-time to meet our customers’ needs."
"Combining our businesses with CF builds upon the company’s platform in Europe and expansive distribution network in North America, enhancing our collective scale and improving our ability to meet the needs of customers in the U.S. and around the world," said Nassef Sawiris, OCI CEO "As significant owners in the combined entity, our shareholders will benefit from the ongoing value creation of the business."