Yara to acquire 60% stake in Brazil's Galvani for $ 318 million

Yara International ASA has entered into an agreement to acquire a 60% stake in Galvani Industria, Comercio e Servicos S/A (Galvani), for an enterprise value of $ 318 million. Galvani, an independent, privately held fertiliser company, is engaged in phosphate mining, Single Super Phosphate (SSP) production and distribution of fertilisers in the centre 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 fertiliser business in Brazil.
 
"This acquisition represents another significant step in realising 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 Jorgen Ole Haslestad, President and Chief Executive Officer, Yara.
 
"The Galvani acquisition will help secure phosphate fertiliser capacity in the centre 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 Jorgen Ole Haslestad.
 
Galvani 2013 revenues amounted to $ 352 million, with an EBITDA of $ 48 million. The company has a total SSP production capacity of approximately 1 million tonnes 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.
 
The enterprise value of $ 318 million for 60% of Galvani comprises $ 132 million for the existing business and $ 186 million for the mining/production projects, and will be adjusted for any deviation from normalised working capital ($ 42 million) at the time of closing. As part of the agreement, Yara will also, based on certain conditions, inject a total of $ 165 million as equity. With Yara's share of the company's debt being $ 93 million, the resulting total equity exposure for Yara will be $ 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 $ 920 million (Yara's share $ 552 million) until 2019, the funding of which will be decided based on maximising value for the company.