Fertilizer giant in the making

Norwegian fertilizer company Yara International confirmed Tuesday that it was in "preliminary talks" on a tie-up with US-based company CF Industries.

"The discussions are at an early stage, and there can be no assurances that these discussions will result in any transaction," Yara said in a statement.

The market valuation of the two companies added together totals $26.3 billion (20 billion euros). Global market leader Potash from Canada is worth close to $29 billion. In terms of annual sales, a merged CF-Yara would have revenues of around $20 billion, nearly triple those of Potash.

CF Industries is worth $12.7 billion, slightly less than Yara, which is valued at $13.6 billion on the Oslo Stock Exchange. The Norwegian government, which owns 36.2 percent of Yara, said there was no decision yet on whether it would approve the merger.

A tie-up with CF Industries would give Yara easier access to markets in North America, where CF, based in Deerfield, Illinois, owns seven major nitrogen fertilizer plants in the US and Canada. In addition, Yara stands to profit from cheaper energy supplies that have resulted from the US shale gas and oil boom.

CF Industries would benefit from Yara's global presence, with sales in more than 150 countries.

The announcement boosted Yara stock by 8.7 percent in morning trading on the Oslo Stock Exchange, while CF Industries jumped about 7 percent in New York.

uhe/nz (Reuters, AP, AFP)