CF Industries Holdings Inc., the largest U.S. producer of nitrogen-based fertilizer, is nearing an agreement to acquire the European and U.S. assets of OCI NV, people familiar with the matter said, creating a global player to rival industry leader Yara International ASA. An announcement could be made as early as Thursday, said the people, who asked not to be identified because the talks are private. CF Industries will be merged with the OCI assets into a new company that will be based in the U.K. and traded in the U.S., helping it lower its tax bill in a so-called inversion transaction, one of the people said. The deal will exclude OCI's operations in Egypt and Algeria, which will remain in the old company based in the Netherlands, the person said. Negotiations could still be delayed or fall apart, and final details of the deal may change, the people said. Trading in OCI's Amsterdam-listed shares has been suspended by the Dutch regulator pending a press release, the Netherlands Authority for the Financial Markets said in a statement ahead of the market opening. CF has gained 13 percent this year, giving it a market value of $14.5 billion. OCI has surged 28 percent, valuing it at 6.4 billion euros ($6.9 billion). Talks Confirmed The deal would come about two weeks after Deerfield, Illinois-based CF and OCI, which is run by Egyptian billionaire Nassef Sawiris, confirmed reports that they were in preliminary talks about a transaction. Buying OCI is a fall-back deal for CF after discussions to merge with Norway's Yara fell apart in October. The deal marks a step change in global growth ambitions for the Deerfield, Illinois-based company that's thrived as a North American supplier of nitrogen given the the cheap raw-materials provided by the nation's shale gas industry. Nitrogen is derived from natural gas, though coal and naphtha are alternative and more costly raw materials. CF has facilities in the U.S., Canada and the U.K., so the deal will help it expand outside outside North America, plus gives it growth in its home market, where OCI is building a nitrogen fertilizer plant in Iowa and a big new methanol plant in Texas. CF will not initially acquire all of a Texas plant, one of the people said. Sawiris has long-held ambitions to expand in North America. Chris Close, a spokesman for CF Industries, declined to comment. A representative for OCI couldn't be immediately reached for comment. ‘Heavily Fragmented' The transaction would allow CF to expand outside the U.S. while also tightening its grip over the domestic market, Colin Isaac, a London-based analyst at Atlantic Equities LLP, said last month. The Iowa plant being built by OCI is the largest nitrogen-fertilizer expansion in the U.S. after CF's own projects, he said at the time. CF Chief Executive Officer Tony Will said in November the industry is "heavily fragmented" and he was still interested in buying production assets instead of building them. Will would likely lead the new, combined entity, one of the people said. Sawiris, Egypt's richest man, relocated Orascom Construction Industries to the Netherlands from Egypt last year through a buyout by OCI. He has a 29 percent stake in OCI, according to data compiled by Bloomberg. The CF-OCI talks come as Potash Corp. of Saskatchewan Inc., the world's largest fertilizer producer, seeks to acquire Germany's K+S AG, which last month rejected a 7.8 billion-euro all-cash offer from its Canadian rival. Source: Bloomberg
