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Canadian N plants part of Yara/Terra merger

Nitrogen fertilizer plants in Saskatchewan and Ontario can expect a new set of managers and owners, respectively, within the next year.

Norwegian chemical firm Yara International announced plans Monday to buy Sioux City, Iowa-based fertilizer firm Terra Industries in an all-cash merger worth US$4.1 billion.

The terms of the deal call for Terra to rename itself Yara North America. The new Yara unit would then oversee all North American operations for the combined firm, including Yara’s manufacturing and sales facilities in Canada and the U.S.

Terra CEO Michael Bennett would then become president, and Sioux City the new home base, of Yara North America.

The agreement, approved “unanimously” by Terra’s board of directors, still needs blessings from shareholders of Yara and Terra alike, plus government antitrust watchdogs’ approval in nations where the combined company would operate.

Also, because Yara plans to fund part of the cash deal through a rights offering worth up to US$2.5 billion, the deal depends on the approval of the rights offering from the Norwegian government, Yara’s biggest shareholder.

If the deal wins all the needed approvals, it would mean new management for Yara’s main Canadian asset, Yara Belle Plaine, the former Saskferco nitrogen fertilizer plant east of Moose Jaw at Belle Plaine, Sask.

Yara’s other Canadian holdings include a 25 per cent stake in Mississauga-based fertilizer supply firm Agrico Canada.

The deal would also mean new owners for Terra’s main Canadian asset, its N plant at Courtright, Ont., near Sarnia.

Alberta assets

Tentative on Terra’s asset list, meanwhile, is its US$250 million deal with Calgary fertilizer firm Agrium for a 50 per cent stake in Agrium’s N fertilizer plant at Carseland, Alta.

Terra and Agrium made that deal in October last year to help Agrium satisfy Canadian competition regulators in the Calgary company’s year-old-and-counting hostile bid for another U.S. fertilizer player, Chicago-based CF Industries.

It’s not yet known how Canadian regulators would respond to Yara taking over Terra, or to the possibility of Yara/Terra owning half of Agrium’s Carseland plant. The Carseland deal is conditional on Agrium succeeding in its CF bid.

CF last month abandoned its own year-long hostile takeover bid for Terra and sold its stake in the Iowa company.

Yara and Terra already have a working relationship as joint venture owners of GrowHow, a UK business they formed in 2007.

“Yara has a solid understanding of the nitrogen business and the value we place on producing and distributing ingredients essential to meeting the needs of a growing global population,” Terra’s Bennett said in a release Monday.

“I am confident Yara’s broad expertise in agricultural, industrial and environmental products will complement Terra’s North American nitrogen position.”

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