CVR Partners LP agreed to acquire Rentech Nitrogen Partners LP for $533 million in cash and stock, extending a wave of consolidation in the fertilizer industry as producers look to boost efficiency and grab market share.
The deal values Los Angeles-based Rentech Nitrogen at $13.69 a share based on Friday’s closing price for CVR, the companies said in a statement Monday. That’s 33 percent above where Rentech Nitrogen ended last week.
The creation of the $1.6 billion company comes at a time when fertilizer makers are seeking greater scale to increase their competitiveness in areas spanning distribution and new markets to the feedstocks needed to make products. Potash Corp. of Saskatchewan Inc. is bidding for K S AG of Germany, and CF Industries Holdings Inc. will acquire nitrogen fertilizer units of OCI NV.
The enlarged group will be the largest producer of urea ammonium nitrate in North America, according to CVR Partners Chairman Jack Lipinski. Carl Icahn’s CVR Energy and Blackstone Group LP affiliate GSO will own 34 percent and 11 percent.
Rentech, which sparked the merger with a strategic review on Feb. 17, was advised by Morgan Stanley, with legal advice from Latham & Watkins. CVR Partners was advised by Vinson & Elkins.
Rentech Nitrogen holders will receive 1.04 units of CVR Partners and $2.57 in cash for each of their shares, and they will retain ownership of Rentech Nitrogen’s Pasadena facility. The deal values the company at $839 million, including debt.