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CF Industries and OCI confirm discussions regarding possible merger

July 20, 2015
Chemical Value Chain
OCI NV (Amsterdam) and CF Industries on Monday confirmed that they are holding discussions about possible combinations or transactions of their businesses. “There can be no assurance that these discussions will result in a definitive agreement. OCI does not intend to further comment on these matters at this stage and will make future announcements if and when appropriate,” OCI said in a statement.
 
CF Industries said that it is in preliminary discussions with OCI NV regarding a potential combination involving certain of OCI’s businesses. “There can be no assurances that these discussions will result in any transaction,” CF Industries said.
 
Last week the Wall Street Journal reported that CF Industries is in advanced merger talks with OCI NV, citing “people familiar with the matter.”
 
OCI is a leading global nitrogen fertilizers and methanol producer with plants in the Netherlands, the United States, Egypt and Algeria. Its current combined capacity is 8.4 million m.t./year, which is due to rise to 12.6 million m.t./year by 2017. The company is adding capacity at its Sorfert fertilizer subsidiary in Algeria and is due to complete construction in the fourth quarter of this year of Iowa Fertilizer Co., a world scale greenfield nitrogen fertilizer complex. The complex will be designed to produce 420,000 m.t./year of urea and 1.5 million m.t./year of urea ammonium nitrate and will have 195,000 m.t./year surplus ammonia for sale on the market. In addition, OCI is establishing Natgasoline, a greenfield methanol facility with capacity for 1.75 million m.t./year, which is expected on stream in 2017 at OCI’s site near Beaumont, TX.
 
CF Industries is a global leader in nitrogen products, serving both agricultural and industrial customers. It operates manufacturing complexes in central United States and Canada. The company is in the process of buying Yara International’s 50% stake in their GrowHow fertilizer joint venture in the United Kingdom. CF Industries also owns an ammonia production facility in Trinidad. 
 
CF Industries’ statement that it is considering a merger of certain businesses, may imply that methanol will not be included in the transaction as CF Industries does not make the product. OCI’s methanol capacity will rise to 3.12 million m.t./year in 2017. The company recently gained a foothold in the European methanol market by acquiring BioMCN, which owns a 440,000-m.t./year plant at Delfzijl, Netherlands. 
 
Analysts say that a deal could be structured as a so-called tax inversion, in which the US company would move its domicile to another country. In 2014, CF Industries generated sales of $4.7 billion while OCI’s revenues reached $2.7 billion.
 
By Natasha Alperowicz
 

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