Multinational submitted request to antitrust regulator to negotiate “certain assets” with FassAgro.
Yara has agreed to sell its NPK liquid fertilizer production and marketing assets in Brazil to FassAgro, the fertilizer business owned by Brazilian group ENG. The company based in Sertãozinho (São Paulo state) supplies inputs to the sugar-energy sector.
The Norwegian multinational wants to raise funds to “reallocate capital”, according to a document submitted to the antitrust watchdog CADE. Like other agricultural input companies, Yara is facing an adverse environment as a result of the fall in commodities, which has affected producers’ appetite for fertilizers and other inputs.
Yara operates in Brazil both in the production of basic raw materials and in the manufacture of final fertilizers. The transaction with FassAgro focuses on the latter stage of the chain, but the companies did not reveal which assets were involved in the deal or the value of the transaction.
The CADE documents only state that the assets are in the states of São Paulo, Minas Gerais, and Mato Grosso do Sul. Yara declined to comment on the matter. ENG did not return requests for comment.
FassAgro has already been developing and producing liquid fertilizers since 2017. In a document submitted to CADE, the company said that it sees the operation as an “opportunity to expand its activities in the fertilizer sector”.
According to the companies, the purchase of the assets will keep FassAgro’s market share at up to 10% of the NPK final fertilizer market. The other competitors in the segment in Brazil are Fertipar, Mosaic and Eurochem.
Globally, Yara’s results have worsened in recent quarters due to falling fertilizer prices. In the Americas, the company’s results have also been affected by the decline in demand.
In the first quarter, the company’s global revenue fell by 20% to $ 3.3 billion, and the EBITDA (earnings before interests, taxes, depreciation and amortization) fell by 11% to $435 million.
In the Americas, the EBIDTA fell by 31%. Yara’s fertilizer deliveries on the continent in the quarter were 10% lower than a year earlier. In addition, producers in the United States were in the off-season. Product deliveries to Brazil fell by 20.9% in the quarter.
At the same time as disposing of its NPK final fertilizer assets, the company is moving forward with a partnership with Petrobras. On Tuesday, the state-owned company announced an agreement that defines the terms of the partnerships that both intend to make in fertilizers, industrial products and decarbonization projects.
Source: Valor International
