The nation’s largest farmer-owned cooperative, St. Paul, Minnesota-based CHS Inc., is paying $2.8 billion for a minority stake in CF Industries Nitrogen—which owns and operates North America’s largest fertilizer plant in Donaldsonville, as well as two others in Port Neal, Iowa, and Yazoo City, Mississippi.
The deal, announced this morning, also comes with a supply agreement under which CHS Inc. will be able to buy up to 1.7 million tons of fertilizer from CF Industries annually.
“This venture represents tremendous strategic value to both CF Industries and CHS,” says Tony Will, president and chief executive officer of CF Industries Holdings Inc., in a prepared statement. “In the past, we have entered into long-term relationships with industry leaders Mosaic and Orica, and this venture with CHS, an industry leader in agriculture, is the logical next step. This transaction matches us with a reliable partner that will take ratable delivery of product across the year, supported by an attractive valuation.”
The deal is expected to close by Feb. 1, 2016, if not earlier. CF Nitrogen is currently expanding capacity at its Donaldsonville and Port Neal plants. When complete, the company says it will
have total production capacity of 18.9 million tons. CHS’ $2.8 billion investment will buy the cooperative an approximately 8.9% stake in CF’s total system capacity.
Deerfield, Illinois-based CF Industries said in a quarterly report released in February that the $2.1 billion expansion of its nitrogen complex in Donaldsonville is on schedule for completion in the third quarter of this year, but that costs associated with the project have risen. CF Industries officials were joined by state and local officials to announce the Donaldsonville expansion project in November 2012.
