The European Commission (EC) on March 13 said it had approved unconditionally the Czech Republic’s chemicals and fertilizer company Agrofert’s acquisition of Vienna-based Borealis AG’s nitrogen business.
Borealis received a binding offer from Agrofert last June for the acquisition of its Nitrogen business, which includes fertilizer, melamine, and technical nitrogen products (GM June 3, 2022).
The Commission concluded that the transaction would raise no competition concerns in the European Economic Area (EEA), according to a Commission media release announcing the clearance.
Based on its market investigation, the Commission found that the transaction would not significantly reduce competition in markets for nitrogen fertilizers, AdBlue non-toxic liquid used as exhaust fluid for diesel engines, and technical nitrogen products such as aqueous ammonia and weak nitric acid.
It also found that the transaction would not raise concerns in relation to the distribution of nitrogen fertilizers in the Czech Republic and Slovakia.
During its investigation, the Commission said it examined the horizontal overlap between the companies’ activities in the nitrogen fertilizer market, in particular in the production and sale of calcium ammonium nitrate fertilizers.
The Commission found that “the market is wider than the territory of Member States, as customers source these products from all over the EEA, and that various types of nitrogen fertilizers are substitutable.”
Moreover, it found that the merged entity “would continue to face several strong competitors and it would only have moderate combined market shares. In addition, the merged entity would be constrained by imports from outside the EEA.”
Prague-based Agrofert is one of the leading European nitrogen fertilizer producers, with production facilities in the Czech Republic, Germany, and Slovakia, and distributes nitrogen fertilizers in the Czech Republic, Hungary, and Slovakia, to a lesser extent, in Croatia, Poland, and Romania. It also produces and sells AdBlue and various technical nitrogen products.
By adding Borealis’ production assets in Austria, Germany, and France, as well as a comprehensive sales and distribution network utilizing the Danube River, this business combination would well complement Agrofert’s existing capabilities in serving its customers across Europe, Borealis said in an earlier statement.
The Czech company’s offer for the Borealis nitrogen business valued the business on an enterprise value basis at €810 million (approximately $861.9 million at current exchange rates).
Borealis pulled out of an earlier agreement to sell its nitrogen unit to EuroChem Group AG following Russia’s invasion of Ukraine in February last year and the resulting imposition of sanctions by the European Union (EU) on Russia (GM March 11, 2022). The EuroChem offer valued the Borealis Nitrogen Business on an enterprise value basis at €455million.
Borealis AG is majority-owned (75%) by Austrian oil and gas company OMV AG.