Exclusive: Norway’s Yara close to acquiring Brazil’s Petrobras fertilizer unit

A person walks in entrance of the headquarters of Petroleo Brasileiro S.A. (Petrobas) in Rio de Janeiro, Brazil March 9, 2020. REUTERS/Sergio Moraes/File Photograph

SAO PAULO/RIO DE JANEIRO, Sept 9 (Reuters) – Yara Worldwide ASA (YAR.OL) is near buying the fertilizer unit placed on sale by state-controlled oil firm Petroleo Brasileiro SA (PETR4.SA), often known as Petrobras, two sources with data of the matter stated on Friday.

Petrobras has chosen Yara’s bid and the deal now must be accredited by the corporate’s board, one of many sources stated. An announcement is predicted over the following weeks.

Yara declined to touch upon “market rumors.” Petrobras declined to touch upon the selecting of Yara’s proposal, referring to its newest submitting in late August by which it stated the businesses might current binding proposals.

In a press release in a while Friday, Petrobras denied imminence of a sale, including the method is within the binding part, “having not reached the stage of receiving proposals.”

Yara already owns 5 vegetation in Brazil and 24 mixing amenities. It additionally owns mining and port operations.

Petrobras’ fertilizer unit, often known as UFN-III, relies in Mato Grosso do Sul state, one in every of Brazil’s largest grain producers.

The sources didn’t specify the deal worth, however stated will probably be decrease than $100 million, because the unit isn’t but operational.

Petrobras has been attempting to promote the unit for a while. In February it agreed to promote it to Russian group Acron, however the deal collapsed. In Could, the oil firm relaunched the method with advisory of the funding banking unit of Banco Bradesco SA.

Different firms within the deal included Brazilian group Unigel and steelmaker CSN. The ultimate deal announcement has been delayed as a consequence of latest modifications in Petrobras’ board.

Brazil is very depending on fertilizer imports. Development of the fertilizer unit within the metropolis of Tres Lagoas started in 2011 and was stopped in 2014 with 81% accomplished after Petrobras rescinded a contract alleging firms weren’t compliant.

When operational, the unit is predicted to supply 2,200 tonnes of ammonia and three,600 tonnes of urea each day, round 20% of the urea consumption within the nation. The unit is predicted to be accomplished inside two to a few years.

Petrobras is predicted to supply the acquirer an choice of shopping for the unit with a pure fuel provide contract. The state-controlled firm had a bigger fertilizer enterprise, however started divesting in 2018. Curiosity for fertilizer companies has risen after the Ukraine warfare interrupted provide and raised fertilizer costs.

Reporting by Tatiana Bautzer and Rafaella Barros; Modifying by Josie Kao and Leslie Adler

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