CF Industries Holdings Inc., soon to have the world’s largest nitrogen fertilizer plant located in Donaldsonville, has dropped plans to acquire the distribution networks of Netherlands-based OCI N.V. in a $6 billion deal.
The combination would have created one of the planet’s largest nitrogen fertilizer companies. CF Industries said an April announcement by the U.S. Treasury on the tax rules for inversions — re-incorporating a company overseas to reduce taxes — forced the companies to re-evaluate the plan.
“Although the original deal created significant value for both parties, changes in the regulatory and commercial environments forced us to re-evaluate the combination and led us to the conclusion that terminating the agreement is in the best interests of CF Industries and its shareholders,” said Tony Will, president and CEO of CF Industries Holdings Inc.
The deal’s failure means CF Industries must pay OCI a $150 million termination fee.
Under the proposed deal, CF Industries would have taken on about $2 billion in debt. The Deerfield, Illinois-based firm would have become a subsidiary of a new holding company based in the United Kingdom.
CF’s Donaldsonville operation already is the largest nitrogen complex in North America, with a $2.1 billion expansion underway.
It can produce about 5 million tons of nitrogen products a year. The complex employs 450 permanent workers and 500 contract workers.
The deal with OCI was expected to increase CF’s nitrogen capacity by 18 percent. CF was to get OCI’s nitrogen operations in the Netherlands and Iowa and a complex in Beaumont, Texas.
The deal also included OCI’s distribution system in Dubai.
Under the deal, CF shareholders would have owned about 72.3 percent of the new company and OCI shareholders about 27.7 percent.