CF Industries Holdings, Inc. CF has agreed to acquire the remaining 50% equity interest in the U.K.’s premier fertilizer manufacturer, GrowHow UK Limited, from Yara International ASA YARIY. The deal worth $580 million in cash will make GrowHow a fully-owned subsidiary of CF Industries.
CF industries acquired a 50% interest in GrowHow in 2010 after its purchase of Terra Industries. The company has ample knowledge about GrowHow’s business and operations. GrowHow owns and operates nitrogen production facilities in Ince and Billingham, U.K.
The transaction, subject to customary closing conditions, is anticipated to be completed later this year after which the GrowHow business will be consolidated into CF Industries with a cash- and debt-free balance sheet.
CF Industries anticipates a mid-teens return profile for the acquisition of GrowHow as the latter has a favorable position in an import-dependent region. The acquisition will further strengthen CF Industries’ track record of returning value to shareholders via effective capital deployment.
The earnings from CF Industries’ 50% stake in GrowHow are presently incorporated under the section, “Equity in Earnings of Non-Operating Affiliates – Net of Taxes”, which will be shifted to the company’s consolidated results section once the transaction is completed.
Combining both the Ince and Billingham units, GrowHow has a production capacity of around 0.9 million short tons of gross ammonia, 1.2 million short tons of ammonium nitrate and 0.4 million short tons of NPK compounds.
Transaction highlights have already been presented by CF Industries to investors at its official website, followed by a conference call held on Jul 1, 2015.
CF Industries currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the fertilizer space include CVR Partners, LP UAN and Intrepid Potash, Inc. IPI, both sporting a Zacks Rank #1 (Strong Buy).
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