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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

ExxonMobil 1Q Profits Plunge 63%

Highlights   * Earnings of $1.8 billion decreased 63 percent from the first quarter of 2015.   * Earnings per share were $0.43 assuming dilution.   * Cash

Shipping, Key Ingredient of EU’s Africa Agenda

The African economy has become one of the most promising global growth markets. Shipping is taking care of the largest part of international trade and in Africa

Ocean Economy Set to Double in Size by 2030

The world’s oceans must be managed well to ensure the potential of an “ocean economy” that was worth US $ 1.5 trillion in 2010.   "Calculations based on the

News

Blacklisted Tanker Returns to Libya's Zawiya Port

A tanker that Libya's rival eastern government had been using to try to export oil in defiance of the Western-backed administration in Tripoli returned to the country on Saturday,

Lerwick Harbor sees Seasonal Boost

The opening of the offshore season in northern waters has seen specialist oil industry vessels return to Lerwick Harbor during April to support subsea development projects.

Cory Brothers Opens in Amsterdam Port

Cory Brothers Shipping Agency is delighted to announce the opening of Cory Brothers (The Netherlands) BV, in the port of Amsterdam, servicing the ARA range. The

 
 
Maritime Contracts Maritime Security Maritime Standards Naval Architecture Offshore Oil Pipelines Port Authority Ship Electronics Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | 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: 0.1198 sec (8 req/sec)