Oslo (2010-02-15): Yara International ASA has signed a cash merger agreement with Terra Industries Inc. at a price of USD 41.10 per Terra share, representing a market capitalization of Terra of USD 4.1 billion. The transaction will give Yara an improved position in the US, and is planned to be supported by a Yara rights issue of USD 2.0-2.5 billion.
The agreed Terra share price of USD 41.10 represents a premium of 23.6% above the closing price on 12 February 2010.
"Yara is committed to the US market, and this transaction presents an attractive opportunity for both companies to strengthen their positions in the US. Yara and Terra are a perfect fit, and the combination will elevate Yara to a truly global leader in the industry. Both companies are strong in ammonia and nitrates, and have complementary geographical footprints. Terra's ammonia and upgraded fertilizer distribution system in the US will be combined with Yara's global sourcing and optimization capabilities as the world's largest producer and trader of fertilizer and ammonia", says Jørgen Ole Haslestad, President and CEO of Yara International ASA.
Terra owns and operates six nitrogen manufacturing facilities in North America and owns a 50% interest in joint ventures in Trinidad and the United Kingdom, the latter in partnership with Yara. Terra has total production capacities of approximately 3.6 million tons ammonia, 3.0 million tons UAN, 1.2 million tons AN, 0.3 million tons urea and 0.3 million tons NPK, including those from its equity shares in its joint ventures. The company reported in 2008 and for twelve months ended 30 September 2009, turnover of USD 2.9 billion and USD 1.9 billion respectively, and net income of USD 641 million and USD 321 million, respectively. Terra has approximately 940 employees in the US and Canada.
"We have signed the merger agreement on the basis of Yara's proven M&A value creating track record, a positive fertilizer market outlook and the improved competitive edge of US nitrogen producers. The structural changes over the last years in the global and US gas market with ample LNG and shale gas have strongly improved the US producers cost position. North American producers are in addition benefiting from logistical advantages as the US will continue to need large imports of nitrogen, and the high construction costs for new plants now favor existing production capacity", says Jørgen Ole Haslestad.
Yara has identified yearly cost synergies with pre-tax effects of USD 60 million to be harvested within a year after closing. In addition, Yara is targeting soft synergies of the same magnitude, including improved utilization and optimization of logistical systems.
Terra has delivered an average annual adjusted EBITDA of USD 613 million over the last three years ending September 2009. The estimated enterprise value of USD 4.3 billion corresponds to an EBITDA multiple of 7.0 before synergies and 5.9 after synergies.
The transaction has been unanimously approved by Yara's Board of Directors and unanimously approved by Terra's Board of Directors. The closing of the transaction is subject to customary closing conditions, including the approval by Terra's shareholder meeting, the approval by Yara's general meeting of the rights issue and approvals from relevant regulatory authorities. The transaction is currently planned to be closed around June 2010. The transaction is not subject to other financing conditions than the approval by Yara's general meeting of the rights issue.
The planned rights issue is dimensioned to support Yara's targeted credit rating and is expected to be carried out around May 2010. The issue price is expected to be set shortly prior to the launch of the rights issue.
Yara's largest shareholder, The Norwegian Government (36.21% ownership), has stated it is positive to subscribe for its pro rata share of the planned rights issue, provided parliamentary approval.
The National Insurance Fund (Folketrygdfondet, 6.57% ownership) has entered into an agreement to underwrite and subscribe for its pro rata share of the rights issue.
The remaining part of the rights issue is underwritten by Citi, Deutsche Bank and Nordea, subject to customary terms and conditions and the Norwegian government subscribing its pro rata share.
Analysts and investor presentation and conference call
An analysts and investor presentation will be held in Yara's office in Bygdøy allé 2 in Oslo at 09:30 CET. The presentation will be web cast. Attached is the link to presentation material and the web cast.
Link to webcast:
Link to presentation material:
There will also be an English conference call in the afternoon with an opportunity to ask questions to Yara's CEO and CFO at 14:00 CET the same day.
European dial-in number +44 20 7162 0025 - conference id: 858356
Up to two weeks after the call, you may listen to the replay by calling:
+44 20 7031 4064, code 858356 or
+47 21 50 12 92
Torgeir Kvidal, Investor Relations
Telephone (+47) 24 15 72 95
Cellular (+47) 91 33 98 32
Bente Slaatten, Media Relations
Cellular (+47) 91 60 62 15
Asle Skredderberget, Media Relations
Cellular (+47) 41 44 36 10
Yara International ASA is the world's leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilizers, we help provide food for a growing world population. Our industrial product portfolio includes environmental protection agents that prevent air pollution. Yara's global workforce of 8000 employees represents the great diversity and knowledge that enables Yara to remain a leading performer in the industry.
This announcement is not an offer of securities for sale in the United States. Securities offered pursuant to the transaction referred to in the announcement may not be offered in the United States absent registration or an exemption from such registration. Any offering of securities for sale in the United States will be made only by means of an offering circular that will contain detailed information regarding Yara and such securities as well as the financial statements of Yara. Such offering circular will be provided only to shareholders and others in compliance with the relevant exemptions from registration.
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)