Yara International ASA reported on Nov. 26 that it has entered into an agreement to acquire OFD Holding Inc. (OFD) from Omimex Resources Inc. for an enterprise value of US$425 million. The purchase includes fertilizer production facilities in Colombia and distribution companies across Latin America, including Abocol (Colombia), Misti (Peru), Omagro (Mexico), Fertitec (Panama and Costa Rica), Cafesa (Costa Rica), and Norsa (Bolivia).
The $425 million enterprise value includes working capital of $332 million. Yara is also acquiring real estate from the same seller for future expansion in the region, valued at a total of $40 million. Closing is expected to take place during the second quarter of 2014, and is subject to due diligence, approval of competition authorities, and other customary approvals.
Yara said the transaction further strengthens its downstream footprint and growth platform in Latin America, and is highly complementary to its recent acquisition of Bunge’s fertilizer business in Brazil. Yara estimates an annual synergy potential of $20 million through logistics and sourcing optimization, and substituting third-party sourced products with Yara products.
"I am excited to announce this agreement, which re-confirms Yara’s long-term commitment to Latin America. OFD fits well with Yara, and will further improve our downstream positioning within the fast-growing cash-crop markets in the region," said Jørgen Ole Haslestad, Yara president and CEO. "This deal marks a further step for our global growth ambition, adding almost half a million tons of upstream fertilizer capacity, further leveraging our capabilities within crop nutrition and value-added fertilizer, to the benefit of our shareholders and agricultural development in Latin America.”
OFD’s production facility in Cartagena, Columbia, has annual capacity of approximately 320 kilotons (kt) compound NPK, 100 kt calcium nitrate, and 70 kt ammonium nitrate, with integrated ammonia production. In addition, OFD has annual production capacity of 25 kt single super phosphate through Fosfatos de Boyaca in Colombia.
OFD also controls approximately 700 kt of NPK blending capacity across 12 sites, and 100 kt of liquid fertilizer capacity as part of its fertilizer distribution network across Colombia, Mexico, Peru, Bolivia, Costa Rica, and Panama. OFD sold 1,131 kt of fertilizer in 2012, generating net revenues of $796 million and an EBITDA of $35 million. The company’s 2011 EBITDA was $64 million.
"We are fully convinced that the knowledge, experience, and portfolio of a global company like Yara, combined with the regional know-how of OFD group of companies in each of the countries, added to our closeness to the Latin-American farmers, will help our customers reach the required levels of agricultural productivity," said Jorge Bernal, president at Abocol S.A.