SOURCE: Rothman Research

Rothman Research

June 18, 2010 08:25 ET

Consolidation Within the Fertilizer Industry

JOHANNESBURG, SOUTH AFRICA--(Marketwire - June 18, 2010) - www.rothmanresearch.com - The chemical industry is slowly moving towards recovery after two years of tumultuous battle against a global and domestic economic turmoil. This industry, however, tends to swing easily with economic fluctuations, and has been on the fence in recent weeks due to the uncertainties in Europe and the potential issues with the Chinese housing sector. The 2008 and 2009 hardship the industry underwent created a platform for consolidation with M&A, partnerships and joint ventures being on top of the priority list for most big players in this space.

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In recent years, acquisitions have been one of the best strategic maneuvers of key players within the industry. In 2008, Agrium Inc. (NYSE: AGU) took over United Agri-Products and its retail operations in South America, expanding its market reach. Agrium also attempted to acquire CF Industries Holdings Inc. (NYSE: CF) for $5.43 billion and this M & A attempt turned into a series of unexpected events.   

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During the first quarter of 2010 the agricultural industry saw some drama on the M&A front with an interweaving scenario of hostile bids, rumors of acquisition, rumors of hostile takeover, withdrawal from bidding and final conclusion of takeover. And this M&A state of affairs involved a number of key players, notably CF Industries Holdings Inc., Agrium Inc., Norway's Yara International and Terra Industries. The end result of this mind-boggling scenario was the definite acquisition of Terra by CF Industries for $4.7 billion. This acquisition helped propel CF Industries to the rank of second largest fertilizer manufacturer globally. Yara kept its rank as the world's number one and Agrium settled at the third place. 

"This industry is still in a consolidation chapter, and we believe M&A activities will continue to dominate the headlines. Only this week, rumors of another landscape-changing acquisition surfaced, this time in the potash segment of the industry. This is going to be an interesting chapter to follow if you are following this space," commented Jack Benassi of www.rothmanresearch.com

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