CF Industries Holdings Inc. (CF), a manufacturer of hydrogen and nitrogen products, announced Monday that it has signed a definitive purchase agreement to buy Waggaman ammonia plant and related assets from Australia's Incitec Pivot Limited for $1.675 billion.
The deal has been unanimously approved by the boards of directors of both companies and is subject to receipt of certain regulatory approvals and other customary closing conditions.
The companies said they will allocate around $425 million of the purchase price to a long-term ammonia offtake agreement. Under the deal, CF Industries will supply up to 200,000 tons of ammonia per year to IPL's Dyno Nobel subsidiary.
CF Industries expects to fund the remaining $1.25 billion of the purchase price with cash on hand.
IPL's ammonia production facility is located in Waggaman, Louisiana. It is situated on an integrated chemicals complex owned by Cornerstone Chemical Co., and the facility has a nameplate capacity of 880,000 tons of ammonia annually.
Currently, Ammonia produced at the Waggaman facility is distributed ratably to three customers, including Dyno Nobel, with approximately 75% used in industrial applications.
CF Industries estimates that the plant will generate gross margin per ton commensurate with its existing ammonia segment prior to synergies.
In the deal, Goldman Sachs & Co. LLC is serving as the financial advisor to CF Industries. Skadden, Arps, Slate, Meagher & Flom LLP is acting as its legal advisor.
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