Yara to Acquire Majority Position in Galvani

By Joseph R. Fonseca
Wednesday, August 06, 2014
Image

 

Yara International ASA has entered into an agreement to acquire a 60% stake in Galvani Indústria, Comércio e Serviços S/A ("Galvani"), for an enterprise value of USD 318 million.

Galvani is an independent, privately held fertilizer company, controlled by Mr. Rodolfo Galvani Jr., a Brazilian entrepreneur. The company is engaged in phosphate mining, Single Super Phosphate (SSP) production and distribution of fertilizers in the center and northeast of Brazil. Galvani also owns licenses for two new greenfield phosphate mine projects in Brazil.

The acquisition is in line with Yara's strategy for growth in Latin America, seeking to develop a production footprint in Brazil to complement its established position, following the recent acquisition of the Bunge fertilizer business in Brazil.

"This acquisition represents another significant step in realizing our Latin American growth strategy, further establishing our position in Brazil as a long-term industry player, committed to developing and investing in Brazilian agribusiness," said Jørgen Ole Haslestad, President and Chief Executive Officer of Yara.

"The Galvani acquisition will help secure phosphate fertilizer capacity in the center of the country and in the attractive and fast growing agri frontiers of Brazil. Furthermore Galvani brings excellent industry competence with cost-effective solutions for mining, production, blending and warehousing facilities," said Jørgen Ole Haslestad.

Galvani 2013 revenues amounted to USD 352 million, with an EBITDA of USD 48 million.
 

The company has a total SSP production capacity of approximately 1 million tons per annum through the industrial complex of Paulinia and Luis Eduardo Magalhaes. Both sites source phosphate rock from two own mines, Lagamar and Angico dos Dias, and the leased mine Irece. To cover future demand for phosphate rock, Galvani has two greenfield and one brownfield mining project under development, as follows:

Salitre (greenfield): up to ~1,200,000 tons phosphate rock per annum
Angico (brownfield): additional ~150,000 tons phosphate rock per annum
Santa Quiteria (greenfield): up to ~800,000 tons phosphate rock per annum

In addition to phosphate rock production, the projects under development include new upgrading capacity for phosphate fertilizer. Start-up for the various projects is expected between 3 and 5 years from closing date.

The enterprise value of USD 318 million for 60% of Galvani comprises USD 132 million for the existing business and USD 186 million for the mining/production projects, and will be adjusted for any deviation from normalized working capital (USD 42 million) at the time of closing. As part of the agreement, Yara will also, based on certain conditions, inject a total of USD 165 million as equity. With Yara's share of the company's debt being USD 93 million, the resulting total equity exposure for Yara will be USD 390 million.

Furthermore, given certain project-related conditions are met, the agreements with Galvani will commit Yara to support the company's development of three specific mining and associated production projects with a total capital expenditure of USD 920 million (Yara's share USD 552 million) until 2019, the funding of which will be decided based on maximizing value for the company.

To reflect the uncertainty of the future projects, the agreement includes several risk reduction elements such as payment conditional upon successful project studies and milestones as well as guarantees related to capital expenditures and operating expense levels.

The transaction is subject to the approval of Brazilian competition authorities (CADE) and other customary approvals. Closing is expected to take place in fourth quarter this year.

Maritime Reporter September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Areva-Siemens Raises Claim Over Finnish Reactor Delays

The French-German consortium Areva-Siemens , the supplier of Finland's much-delayed Olkiluoto-3 nuclear reactor, has increased its claim against Finnish utility Teollisuuden Voima (TVO),

Ezra Bags $70m in Offshore Contracts

Ezra Holdings Limited, a leading contractor and provider of integrated offshore solutions to the oil and gas industry, today announced that the Group’s Subsea Services division,

WFW Advises ING Bank on $340m Loan Facility for Euronav

Watson, Farley & Williams (WFW) has advised ING Bank N.V. (ING) as sole bookrunner and facility agent for a syndicate of banks on a $340 million loan facility made available to Euronav NV.

News

Decade Old India Shipping Summit Makes History

In ten years, India Shipping Summit held consistently in Mumbai, has sailed on a robust growth course despite the worldwide witnessing recessionary waves buffeting any endeavors to grow and gain.

USCG to Ensure Safety During World Series

The Coast Guard and local agencies are working to ensure the safety of boaters and baseball fans during World Series games at AT&T Park this weekend. The

Areva-Siemens Raises Claim Over Finnish Reactor Delays

The French-German consortium Areva-Siemens , the supplier of Finland's much-delayed Olkiluoto-3 nuclear reactor, has increased its claim against Finnish utility Teollisuuden Voima (TVO),

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Salvage Ship Electronics Ship Simulators Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1225 sec (8 req/sec)