By Angela Chen
Farmer-owned cooperative CHS Inc. will invest $2.8 billion in a
subsidiary of fertilizer maker CF Industries Holdings Inc., in
return for the right to buy a slice of CF's production capacity at
market prices.
CHS will be entitled to semiannual profit distributions. It will
also be able to buy up to 1.7 million tons of urea and UAN, a
solution of urea and ammonium, at market price each year--8.9% of
CF's total production capacity.
CF Industries operates nitrogen-manufacturing complexes in the
central U.S. and Canada, and distributes plant nutrients through a
system of terminals, warehouses and associated transportation
equipment located primarily in the Midwestern U.S.
The subsidiary, CF Nitrogen, owns three production facilities in
the U.S. It will continue to operate all the facilities. Pending
successful expansion, the facilities will have total production of
18.9 million product tons, not including the new capacity from an
earlier deal.
"Entering nitrogen fertilizer manufacturing through the purchase
of a minority ownership in CF Nitrogen is the single largest
investment in CHS history," said CHS Chief Executive Carl
Casale.
Earlier in August, CF agreed to buy parts of a Dutch competitor
for about $8 billion and shift its headquarters to the U.K.,
creating a global nitrogen-fertilizer powerhouse with a
significantly lower tax bill.
The transaction is expected to close either Feb. 1 or earlier by
mutual consent.
Shares of CF have increased about 5% this year through Tuesday's
close.
Write to Angela Chen at angela.chen@wsj.com
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