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CF Industries Holdings, Inc. (NYSE:CF) And Yara International ASA (ADR) Seeking Potential Merger

Boston, MA 09/24/2014 (wallstreetpr) – CF Industries Holdings, Inc. (NYSE:CF) announced that it is in talks with Yara International ASA (ADR) regarding a potential merger.

New, Bigger Entity

According to the Wall Street Journal article, CF Industries Holdings, Inc. (NYSE:CF) and Norway-based Yara are seeking a merger to create a new entity. The deal is expected to the biggest maker of nitrogen fertilizer of the world as the new company would generate $19 billion annually in the global fertilizer business. According to the 2013 revenue figures for CF and Yara, which were $5.47 billion and $13.4 billion, the market value of the integrated company would be $26.4 billion.

The two companies are proposing to combine to create a new powerhouse that will combine CF Industries Holdings, Inc. (NYSE:CF)’s immediacy to cheap natural gas with Yara’s global distribution system. Low-cost natural gas is an important component in nitrogen fertilizers. The decreasing crop prices and increasing competition from China have created immense pressure on fertilizer makers. In such a scenario, the companies expect the merger to be a solution to the industry’s recent need for consolidation.

Recent Acquisitions

There has been a long train of merger events in the fertilizer industry recently. Yara itself had acquired OFD Holding in a $750 million deal, to boost its operations in Latin America. CF was also engaged in spinning-off its phosphate business to Mosaic Co (NYSE:MOS) for $1.4 billion. In 2010, CF Industries Holdings, Inc. (NYSE:CF) had acquired Terra, outbidding Yara with its $4.7 billion offer.

The companies however said that the merger proposition is only in the initial stage and may not necessarily result in a merger. In view of analysts, such a tie-up would raise regulatory inquiry because it involves two companies that have a big individual market shares. Yara’s spokesman, Esben Tuman, underlined that the talks are based on the understanding that both the companies operate in different geographical areas.

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing.

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