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Yara International ASA: Yara to acquire majority position in Galvani, Brazil

2014-08-05 08:01:00
Ticker Giełda ISIC Kraj Miasto
YAR XOSL Norway Oslo

Oslo, 5 August 2014: Yara International ASA has entered into an agreement to

acquire a 60% stake in Galvani Indústria, Comércio e Serviços S/A ("Galvani"),

for an enterprise value of USD 318 million.

Galvani is an independent, privately held fertilizer company, controlled by Mr.

Rodolfo Galvani Jr., a Brazilian entrepreneur. The company is engaged in

phosphate mining, Single Super Phosphate (SSP) production and distribution of

fertilizers in the center 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 fertilizer

business in Brazil.

"This acquisition represents another significant step in realizing 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 J?rgen Ole Haslestad, President and Chief Executive Officer

of Yara.

"The Galvani acquisition will help secure phosphate fertilizer capacity in the

center 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 J?rgen Ole Haslestad.

Galvani 2013 revenues amounted to USD 352 million, with an EBITDA of USD 48


The company has a total SSP production capacity of approximately 1 million tons

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. To cover future demand for phosphate rock,

Galvani has two greenfield and one brownfield mining project under development,

as follows:

Salitre (greenfield): up to ~1,200,000 tons phosphate rock per annum

Angico (brownfield): additional ~150,000 tons phosphate rock per annum

Santa Quiteria (greenfield): up to ~800,000 tons phosphate rock per annum

In addition to phosphate rock production, the projects under development include

new upgrading capacity for phosphate fertilizer. Start-up for the various

projects is expected between 3 and 5 years from closing date.

The enterprise value of USD 318 million for 60% of Galvani comprises USD 132

million for the existing business and USD 186 million for the mining/production

projects, and will be adjusted for any deviation from normalized working capital

(USD 42 million) at the time of closing. As part of the agreement, Yara will

also, based on certain conditions, inject a total of USD 165 million as equity.

With Yara's share of the company's debt being USD 93 million, the resulting

total equity exposure for Yara will be USD 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 USD 920

million (Yara's share USD 552 million) until 2019, the funding of which will be

decided based on maximizing value for the company.

To reflect the uncertainty of the future projects, the agreement includes

several risk reduction elements such as payment conditional upon successful

project studies and milestones as well as guarantees related to capital

expenditures and operating expense levels.

The transaction is subject to the approval of Brazilian competition authorities

(CADE) and other customary approvals. Closing is expected to take place in

fourth quarter this year.


Thor Gi?ver, Investor Relations

Cellular (+47) 48 07 53 56

E-mail thor.giaver@yara.com

Esben Tuman, Corporate Communications

Cellular (+47) 90 50 84 00

E-mail esben.tuman@yara.com

Yara delivers solutions for sustainable agriculture and the environment. Our

fertilizers and crop nutrition programs help produce the food required for the

growing world population. Our industrial products and solutions reduce

emissions, improve air quality and support safe and efficient operations.

Founded in Norway in 1905, Yara has a worldwide presence with sales to 150

countries. Safety is always our top priority.


This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

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Source: Yara International ASA via GlobeNewswire