Yara International ASA has acquired a controlling interest in Fertibras, a Brazilian fertilizer distribution and marketing company, clearly establishing Yara as the second largest player in the Brazilian market. The total purchase price for 48.09 percent of the shares in Fertibras, constituting 99.95 percent of voting shares, is USD 126 million.Oslo (2006-07-18): Yara International ASA has acquired a controlling interest in Fertibras, a Brazilian fertilizer distribution and marketing company, clearly establishing Yara as the second largest player in the Brazilian market. The total purchase price for 48.09 percent of the shares in Fertibras, constituting 99.95 percent of voting shares, is USD 126 million.
“Brazil is one of the most important fertilizer markets in the world and is key to our growth strategy. Yara already has a strong market position and an efficient operation in the country based on the acquisition of Adubos Trevo in 2000. The acquisition of Fertibras will further strengthen Yara’s position and scale, and create a strong platform for further consolidation of the Brazilian fertilizer industry,” says President and CEO of Yara International, Thorleif Enger.
Fertibras has sales of up to 1 million tonnes of fertilizer annually in Brazil through its ownership of a number of warehouses and bulk blending plants. After the transaction, Yara/Fertibras will be the second largest fertilizer company in Brazil. Fertibras also holds a minority position in Fosfertil, the primary domestic upstream producer of fertilizer. This position is and will continue to be entitled to a seat on the Board of Directors of Fosfertil. The ownership will give Yara access to local production and a distribution network that complements its existing market positions. At the same time it will offer significant opportunities to realize synergies between the two organizations. Yara will, as the leading global fertilizer company, be better positioned to balance domestic production with imported sourcing.
Brazil is one of the fastest growing fertilizer markets, with a 6 percent average annual growth rate over the last ten years. The country still has large undeveloped areas suitable for agriculture, offering great growth potential. Brazil imports approximately 60 percent of its fertilizer consumption. The Brazilian fertilizer industry is still relatively fragmented with many small and medium size companies.
Fertibras owns directly and indirectly 15 percent of Fosfertil, which is the biggest producer of nitrogen and phosphate fertilizers in Brazil. Fosfertil has rock mining operations and produces all the main phosphate products for Brazilian agriculture. The company has several nitrogen fertilizer plants producing mainly ammonia, urea and ammonium nitrate. Total production capacity after recent expansions, amounts to about 2.6 million tonnes of phosphate fertilizer, almost 1 million tonnes of nitrogen fertilizer, and about 0.3 million tonnes of products for other industrial uses. The main ammonia production is based on the same technology in use at Yara’s plant in Brunsbüttel, which uses heavy fuel oil from a neighboring refinery.
Fertibras will be consolidated in Yara’s accounts. At the end of 2005 Fertibras had a net interest bearing debt of USD 77 million.
Fertibras is listed on the Sao Paulo Stock Exchange. The other shareholders are primarily investment funds.
The Brazilian authorities must approve the purchase of the shares in Feribras. This approval will only be given after the transaction is effective.