Fertilizer producer CF Industries Holdings, Inc. (CF: Quote) agreed Thursday to acquire Canada's biggest grain handler Viterra, Inc.'s (VT.TO: Quote,VTA.AX) 34 percent interest in Canadian Fertilizers Ltd. or CFL, from Swiss commodities trader Glencore International Plc (GLEN.L,GLNCY.PK,GLCNF.PK) for C$915 million in cash.
The CF's purchase of Medicine Hat Facility interest is subject to Glencore's completion of the acquisition of Viterra, and receipt of Canadian regulatory approvals.
CFL owns the largest nitrogen fertilizer complex in Canada, located in Medicine Hat, Alberta. The complex has two ammonia plants with 1,250,000 tons of production capacity and a urea plant with 810,000 tons of production capacity.
"We are pleased to announce this agreement to acquire Viterra's interests in CFL. This acquisition is a low-risk expansion of our nitrogen supply capability, as we have operated the complex for over 35 years," CF Chairman and CEO Stephen Wilson said in a statement.
Wilson added, "It will add approximately 425,000 gross tons of ammonia and 275,000 tons of urea per year to our nitrogen production capacity in a region with low natural gas costs."
Baar, Switzerland-based Glencore agreed in mid-March acquire Regina, Saskatchewan-based Viterra for C$16.25 per share at a 48 percent premium in an all-cash deal that values Viterra at about C$6.1 billion.
Meanwhile, in a parallel deal then, Canadian fertilizer firm Agrium Inc. (AGU: Quote,AGU.TO: Quote) Agrium, Inc. (AGU, AGU.TO) and privately-held Richardson International Ltd. agreed to acquire the majority of Viterra's retail agri-products business, including the Medicine Hat Facility, from Glencore in a cash deal of about C$1.8 billion, subject primarily to the completion of Glencore's acquisition of Viterra.
The deal will also see Richardson buying 23 percent of Viterra's Canadian grain handling assets, certain agri-centres and certain processing assets in North America for C$800 million in cash.
Agrium then nominated CF to buy the Medicine Hat facility interest under a support and purchase agreement between Glencore and Agrium. Under the agreement, CF now acquires 34 percent of CFL's outstanding preferred and common stock as well as a product purchase agreement, whereby CF will be entitled to buy 100 percent of CFL's ammonia and urea production.
Glencore is keen on acquiring Viterra in an effort to boost its agricultural business in Canada, one of the world's major grain and oilseeds markets. The deal will in turn also provide Canadian farmers access to Glencore's global distribution network and boost their ability to export products into international grain and oilseeds markets.
CF closed Thursday's regular trading session at $194.39, down $0.23 or 0.12% on a volume of 1.13 million shares, while AGU closed at $94.19, up $0.04 or 0.04% on a volume of 1.06 million shares.
VT.TO closed on the TSX at C$16.08, down C$0.01 or 0.06% on a volume of 0.11 millions shares, and AGU.TO closed at C$94.59, down C$0.11 or 0.12% on a volume of 0.74 millions shares.
Meanwhile, GLEN.L closed on the LSE at 316.65 pence, down 5.95 pence or 1.84% on a volume of 9.74 million shares.
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by RTT Staff Writer
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