On Friday, two of the biggest fertilizers companies in the world, ended merger talks, after both the companies couldn’t mutually agree on terms. The deal is the latest to join the ranks of unsuccessful mergers that fell apart in the midst of precarious markets and inquiries concerning alleged inversion deals.
CF Industries Holdings Inc., based in Deerfields, Ill., near Chicago, and Yara International of Norway had been exploring a possible merger deal that would fundamentally have been a merger of equals and would have united the world's two biggest makers of nitrogen fertilizer. The companies initially revealed about the on-going discussions a month ago.
Combined market value of the two companies would have been about $24.8 billion, quite near the $26.3 billion figure of Potash Corporation of Canada, the world’s largest fertilizer producer. The deal fizzled out not long after Yara lost its CEO and its next successor in a few days, raising several eyebrows on the direction the company was heading to.
Tony Will, president and CEO of CF Industries, in a news release on Friday said that despite the fact that CF recognized exceptionally noteworthy operational and structural synergies, they were at last not able to concede to terms of a transaction that met the requirements of all its shareholders.
Days after the merger talks were proclaimed, Svein Richard Brandtzaeg advised Yara that he would not take the top management job at the organization and would stay as president and CEO of Norsk Hydro, a Norwegian aluminum producer. Mr. Brandtzaeg had been intended to replace Jorgen Ole Haslestad, the organization's CEO who was supposed to resign in 2015.
On Oct. 7, amid the merger talks, Yara unexpectedly fired Mr. Haslestad, saying he was “not the right person to lead the company going forward” and would not have a part in the combined entity if the merger were finalized.
Yara International, based in Oslo, was spun off from Norsk Hydro in 2004. It posted sales of 85.1 billion Norwegian kroner ($12.9 billion), in 2013 and utilizes around 9,759 individuals in 50 nations. The Norwegian government holds a 30 percent stake in the organization.
One question hovering over the merger talks was whether the organizations would structure the arrangement as a inversion-deal, where a U.S. based company reincorporates abroad to bring down its corporate tax duty and access cash in foreign subsidiaries. Inversion-deals are quite popular in the U.S. currently.
The Treasury Department as of late agreed on new rules that would make inversion-deals less convincing economically, bringing about a few organizations to reconsider planned arrangements. Recently, the American drug producer Abbvie strolled away from its $54 billion offer to buy Shire of Ireland, referring to the potential effect of the Treasury Department's one-sided changes to the tax rules.
CF Industries was established as a fertilizer broker in 1946 yet later ventured into manufacturing. It owns a 50 percent stake in Keytrade, a global fertilizer trading company situated in Switzerland, and also joint ventures in Britain and in Trinidad and Tobago. CF posted sales of $5.47 billion in 2013 and has around 2,800 employees.
Will, CEO of CF Industries in a news release stated that the company has a solid stand-alone strategy and is confident in its material increment, in their cash flow generation as their capacity expansion projects are streaming right as planned.