CVR Partners buy Rentech Nitrogen $533 million

CVR Partners to buy Rentech Nitrogen for $533 million

6:48 PM, 10th August 2015
CVR Partners to buy Rentech Nitrogen for $533 million

LONDON, UK: Nitrogen fertilizer producer CVR Partners LP said on Monday it would buy Rentech Nitrogen Partners LP for $533 million, excluding debt, as global fertilizer makers scale up at a time when increased supplies weigh on nitrogen prices.

The deal creates North America’s fifth-largest nitrogen producer, vaulting the companies past Norway-based Yara International. It comes less than a week after CF Industries Holdings Inc said it would buy OCI NV’s North American and European plants for $6 billion, making CF the world’s largest publicly traded nitrogen company.

The US is the world’s biggest corn producer, but a net importer of critical fertilizer nitrogen. Those conditions and North America’s relatively cheap natural gas, a key feedstock for nitrogen production, have encouraged others such as Koch Industries and Agrium Inc to expand.

Rentech Nitrogen shareholders will receive 1.04 units of CVR Partners and $2.57 cash for each unit held. It represents a premium of 33 percent to the company’s Friday closing price.

The deal gives CVR a second nitrogen plant, at East Dubuque, Illinois, but excludes Rentech Nitrogen’s plant in Pasadena, Texas. Rentech Nitrogen said it planned to sell the Pasadena facility before the closing of the merger with CVR Partners.

Rentech Nitrogen, a master limited partnership of Rentech Inc, will own 40.5 million units, or 35.6 percent of the combined company.

CVR Partners, owned by Carl Icahn-controlled CVR Energy Inc, will refinance Rentech Nitrogen’s net debt of about $307 million.

The deal is expected to close by the end of 2015 and no later than May 2016, the companies said.

Sugar Land, Texas-based CVR Partners said it expects the deal to be double-digit accretive to distributable cash per unit before synergies.

Potash Corp of Saskatchewan, the world’s second-largest potash miner, has proposed to acquire German salt and fertilizer company K+S AG.

Los Angeles-based Rentech Nitrogen hired Morgan Stanley in February to explore strategic alternatives. Latham & Watkins was Rentech Nitrogen’s legal adviser, while Vinson & Elkins served as legal adviser to CVR Partners.

© Reuters News

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