CF Industries, CHS Form Strategic Venture

Kelly MarshallAgribusiness, Fertilizer

chs-logoCF Industries Holdings, Inc. and CHS Inc. have announced an agreement to enter into a strategic venture.  CHS will purchase a minority equity interest in CF Industries Nitrogen, LLC (CF Nitrogen) for $2.8 billion and be entitled to semi-annual profit distributions from CF Nitrogen.  Under the supply agreement, CHS, a farmer-owned cooperative, will be entitled to purchase annually up to a total of 1.7 million tons of UAN and urea at market prices.

“This venture represents tremendous strategic value to both CF Industries and CHS,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “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.”

iface_cfi_logo“Entering nitrogen fertilizer manufacturing through the purchase of a minority ownership in CF Nitrogen is the single largest investment in CHS history,” said Carl Casale, president and chief executive officer, CHS Inc. “This positions CHS and our owners for long-term dependable fertilizer supply, supply chain efficiency and economic value. In addition, the ability to source product from CF Nitrogen production facilities under our supply agreement benefits our owners and customers through strategically positioned access to essential fertilizer products.”

Once the capacity expansion projects are completed at Donaldsonville and Port Neal, CF will have total production of 18.9 million product tons, not including the new capacity from the business combination with OCI N.V. Of that total 18.9 million tons, CHS will have the right to purchase up to 1.7 million tons, or about 8.9 percent of CF Industries’ total production capacity. CHS, a major CF customer and knowledgeable industry leader, is making a $2.8 billion investment for approximately 8.9 percent of CF’s total system capacity.

The transaction is expected to close February 1, 2016, or earlier by mutual consent, subject to satisfaction of certain conditions.

A conference call will be held 9:00 am ET on Wednesday, August 12, 2015.  For information about accessing the call, click here.