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UPDATE 2-CHS in $2.8 bln deal with CF for fertilizer supply

Published 2015-08-12, 09:17 a/m
© Reuters.  UPDATE 2-CHS in $2.8 bln deal with CF for fertilizer supply
GS
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MS
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CF
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OCI
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* CHS can buy up to 1.7 mln tons of fertilizer annually
* CHS scraps construction of North Dakota fertilizer plant
* Deal for 80 years

(Adds details, background)
Aug 12 (Reuters) - U.S.-based agribusiness CHS Inc CHSCP.O
said it would invest $2.8 billion in a unit of fertilizer
producer CF Industries Holdings Inc (NYSE:CF) CF.N to secure nitrogen
fertilizer supplies.
This is the third deal in a week in the highly fragmented
global fertilizer industry, which is trying to cope with weak
prices caused by excess supply.
CHS will have the right to buy as much as 1.7 million tons
UAN - a solution of urea and ammonium nitrate in water - and
urea, at market prices annually, the companies said on
Wednesday. ID:nPn74DKw9
The deal accounts for about 8.9 percent of CF's total
production capacity and will be effective for 80 years.
CF said last Thursday it would buy Netherlands-based rival
OCI NV's OCI.AS North American and European plants for $6
billion, while CVR Partners LP UAN.N said on Monday it would
buy Rentech Nitrogen Partners LP RNF.N for $533 million.
CHS, an agribusiness owned by farmers, ranchers and
cooperatives across the United States, will be entitled to
semi-annual profit distributions from the unit, CF Industries
Nitrogen LLC, the companies said.
CF Nitrogen currently owns production plants in Louisiana,
Iowa and Mississippi. CF plans to drop down a fourth plant,
located in Oklahoma, into CF Nitrogen before the deal closes,
expected by Feb. 1.
CHS said on Wednesday it would not go ahead with the
construction of a fertilizer plant at Spiritwood in North
Dakota.
The $3 billion project, announced in 2014, was expected to
produce more than 2,400 tons of ammonia daily when completed in
the first half of 2018.
CHS, a big customer for CF, said the deal does not include
additional capacity CF will get from the OCI acquisition.
Morgan Stanley & Co LLC (NYSE:MS) and Goldman Sachs & Co (NYSE:GS) are CF's
financial advisers, while Skadden, Arps, Slate, Meagher & Flom
LLP is its legal adviser.
Baker & McKenzie LLP is the legal adviser to CHS.
While CF shares were down less than 1 percent at $56.85
before the bell, CHS shares were unchanged.
Up to Tuesday's close, CHS stock had declined 3.6 percent
over the past 12 months, while CF shares had fallen 16 percent.


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