All Posts from August 5, 2014

Yara to buy majority stake in Galvani

Yara International ASA has entered into an agreement to acquire a 60 percent stake in Galvani Indústria, Comércio e Serviços S/A (Galvani), for an enterprise value of US$318 million.

Galvani is an independent, privately held fertilizer company, controlled by Rodolfo Galvani Jr., a Brazilian entrepreneur. The company is engaged in phosphate mining, Single Super Phosphate (SSP) production and distribution of fertilizers in the center and northeast of Brazil. Galvani also owns licenses for two new greenfield phosphate mine projects in Brazil.

Yara said the acquisition is in line with its strategy for growth in Latin America, seeking to develop a production footprint in Brazil to complement its established position, following the recent acquisition of the Bunge fertilizer business in Brazil.

"This acquisition represents another significant step in realizing our Latin American growth strategy, further establishing our position in Brazil as a long-term industry player, committed to developing and investing in Brazilian agribusiness," said Jørgen Ole Haslestad, President and Chief Executive Officer of Yara.

"The Galvani acquisition will help secure phosphate fertilizer capacity in the center of the country and in the attractive and fast growing agri frontiers of Brazil. Furthermore Galvani brings excellent industry competence with cost-effective solutions for mining, production, blending and warehousing facilities," said Jørgen Ole Haslestad.

Galvani 2013 revenues amounted to US$352 million, with an EBITDA of US$48 million. The company has a total SSP production capacity of approximately 1 million mt/y through the industrial complex of Paulinia and Luis Eduardo Magalhaes. Both sites source phosphate rock from two own mines, Lagamar and Angico dos Dias, and the leased mine Irece. To cover future demand for phosphate rock, Galvani has two greenfield and one brownfield mining project under development, as follows:

Salitre (greenfield): up to ~1,200,000 mt phosphate rock per annum Angico (brownfield): additional ~150,000 mt phosphate rock per annum Santa Quiteria (greenfield): up to ~800,000 mt phosphate rock per annum

In addition to phosphate rock production, the projects under development include new upgrading capacity for phosphate fertilizer. Start-up for the various projects is expected between 3 and 5 years from closing date.

The enterprise value of US$318 million for 60 percent of Galvani comprises US$132 million for the existing business and US$186 million for the mining/production projects, and will be adjusted for any deviation from normalized working capital (US$42 million) at the time of closing. As part of the agreement, Yara will also, based on certain conditions, inject a total of US$165 million as equity. With Yara’s share of the company’s debt being US$93 million, the resulting total equity exposure for Yara will be US$390 million. Furthermore, given certain project-related conditions are met, the agreements with Galvani will commit Yara to support the company’s development of three specific mining and associated production projects with a total capital expenditure of US$920 million (Yara’s share US$552 million) until 2019, the funding of which will be decided based on maximizing value for the company.

To reflect the uncertainty of the future projects, the agreement includes several risk reduction elements such as payment conditional upon successful project studies and milestones as well as guarantees related to capital expenditures and operating expense levels.

The transaction is subject to the approval of Brazilian competition authorities (CADE) and other customary approvals. Closing is expected to take place in fourth quarter this year.

Farmers Inc., GreenPoint AG announce agronomy consolidation

Farmers Inc., Greenville, Miss., and Memphis-based GreenPoint AG on Aug. 5 announced an agronomy business consolidation that will combine Farmers Inc.’s Greenville, Miss., and Rolling Fork, Miss., agronomy locations with GreenPoint AG’s facilities in Rolling Fork and Leland, Miss. The consolidated agronomy business will operate under the GreenPoint AG name.

Under terms of the agreement, Farmers Inc. will receive a minority ownership interest in GreenPoint AG, and will continue to provide fuel along with products offered by the Farmers Inc. retail store on Raceway Road in Greenville. GreenPoint AG will provide seed, crop nutrients, crop protection products, and services at their Leland location and both Rolling Fork locations.

“This is a great opportunity for both of our organizations to combine our efforts to better serve our market,” said Tim Witcher, president and CEO of GreenPoint AG. “We are excited about the expertise that Farmers Inc. and GreenPoint AG bring together to provide more advantages and resources to area growers.”

GreenPoint AG was formed in 2012 (GM Aug. 13, 2012) as an agronomy joint venture between Tennessee Farmers Cooperative, La Vergne, Tenn., and Winfield Solutions LLC, a leading provider of agricultural inputs and a wholly-owned subsidiary of Land O’ Lakes Inc. GreenPoint currently operates approximately 50 agronomy locations in Arkansas, Louisiana, Mississippi, Missouri, and Kentucky.

Farmers Inc. is a stockholder corporation that was started in 1956 by growers in Mississippi’s Washington, Sharkey, Issaquena, and Bolivar counties. The business currently has more than 350 stockholders and services many farms in those same counties. Farmers Inc. and GreenPoint AG noted that they each serve similar customer bases, and principally provide seed, crop nutrients, crop protection products, and related services for area growers who produce corn, cotton, and soybeans.

“In today’s highly competitive agronomy market, this consolidation will give our farmers more services and opportunities than ever before,” said Floyd Trammell, executive vice president and general manager of Farmers Inc. “Farmers Inc. is proud of its 58-year history of providing goods and services throughout the Delta, and looks forward to providing fuel and products through ‘The Co-Op’ in the future. Our fuel and oil business is growing, and we intend to be the fuel supplier of choice to all our farmers.”

Asmark to honor Ford West

The Asmark Institute on Aug. 5 announced plans to recognize Ford B. West for his years of service to the fertilizer industry by dedicating a new training center in his honor. A dedication ceremony to commemorate the launch of the Ford B. West Center for Responsible Agriculture will be held on Oct. 27, 2014 in Owensboro, Kentucky. West served as the president of The Fertilizer Institute (TFI). He retired in 2013 after 34 years of service to TFI and the industry.

"Ford West is known throughout the U.S. for his impeccable integrity, tireless work ethic and an inherent ability to quickly dissect complicated issues into a simple plan of action. It is very fitting that we honor him by creating a first-of-its-kind learning center that advances safety and compliance for the ag industry," said Allen Summers, Asmark Institute president.

The facility will be used as a national training and education center for personnel employed in the agricultural input industry. Among other programs planned for the new facility, will be the training of auditors to implement ResponsibleAg, an industry-led effort to assist agricultural retailers with compliance on a myriad of federal environmental, health, safety and security regulations.

Agrium Inc.’s Crop Production Services (CPS) recently donated the retired facility to the Asmark Institute to help make this national training center possible. The retired facility served as a retail farm center until 2014 when CPS consolidated local operations and closed the site. The Asmark Institute anticipates the renovation and construction project, which includes training scenarios, to cost $1 million. Renovations at the new center will be complete this fall and include a classroom and computer lab along with the typical equipment and simulated operations found at ag retail locations nationwide.