Latest fertilizer deal a peaceful, $4.1bn affair

Yara's friendly USD 4.1bn takeover of Terra intensifies the ongoing consolidation of the global fertiliser sector.

JOHANNESBURG - 

Sioux City based Terra Industries has accepted a USD 4.1bn cash offer from Norway's Yara, in the latest round of consolidation in the increasingly active global fertiliser sector.

Yara already ranked as fourth largest fertiliser company in the world, after PotashCorp, Mosaic, and unlisted Belaruskali. The Yara deal with Terra, however, moves Yara further away from what can be considered the optimum production mix between potash, phosphate and nitrogen. Yara is heavily weighted to nitrogen, and the latest deal will only reinforce that.

The past few weeks have seen the world's biggest diversified resources stock, BHP Billiton, in a USD 320m cash bid for Athabasca Potash, highlighting the growing intensity around potential consolidation in the global fertiliser industry.

There are hundreds of phosphate mines around the world, but only a handful of potash miners, of which all but one, Belaruskali, are listed. Also on the fertiliser hunt is Vale, the world's No 2 miner, by value, after BHP Billiton, which recently announced an all-cash USD 3.8bn bid for 100% of BPI, a division of Bunge, which owns phosphate rock mines and phosphates assets in Brazil, and a 54% stake in Brazil's Fosfertil.

Vale has long ranked as Brazil's sole potash miner, at Rosario do Catete. In early 2009 Vale bought Rio Tinto's potash assets in Argentina and Canada, for USD 850m. For its part, BHP Billiton in May 2008 bought for USD 282m Anglo Potash, which held 25% of a Canadian joint venture company, in which BHP Billiton already held the other 75%. The Jensen project is adjacent to the Burr Project, now under acquisition from Athabasca Potash.

Today's deal is peaceful. Just a year ago, Terra voiced an out-of-hand rejection of an unsolicited bid from CF Industries, a nitrogen-maker and phosphate miner, and, at the same time, CF Industries found itself on the receiving end of an unsolicited bid from Agrium.

Meanwhile, Canada's PotashCorp remains the king of the global fertiliser sector. Beyond its substantial operations, it holds substantial stakes in Sociedad Química, and Arab Potash, and handy stakes in ICL and Sinofert, an increasingly important distributor.

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