The country’s biggest fertilizer maker, Incitec Pivot (IPL) said today it is set to acquire manufacturer of commercial explosives Dyno Nobel (DXL) for $3.3 billion, a result which will create a ‘leading global chemicals company’.
Incitec Pivot said it has entered into a Scheme Implementation Agreement with Dyno under which it proposes to acquire all of the shares in Dyno Nobel which it does not already own. It already holds 13% in Dyno, making it Dyno’s largest shareholder.
The transaction offers $2.80 per share, and will require approval of Dyno Nobel shareholders.
Dyno’s directors have unanimously recommended that shareholders vote in favour of the IPL Scheme.
Under the terms of the agreement, Dyno Nobel shareholders will receive 0.01406 IPL shares and $0.70 in cash per share representing a mix of 75% of scrip and 25% cash.
IPL said it has secured $2.4 billion in funding from a consortium of leading commercial banks which will be used to pay the cash component of the IPL Scheme and to refinance existing IPL and Dyno Nobel debt.
“The combined group will have revenues in excess of $3.5 billion, a market capitalisation of more than $9 billion and be among the top 30 companies on the Australian Securities Exchange,” managing director Julian Segal said.
“There is a natural fit as both businesses have nitrogen-based manufacturing at their core. Also, the two companies are leaders in their chosen industries with recognised and trusted brands,” he said.
The transaction proposal comes only days after Incitec forecast a more than doubling in pre tax earnings for the year to September 30, which propelled its share to an all-time high of $174.10.
Mr Segal said that the offer was attractive for the shareholders of both companies.
“Dyno-Nobel shareholders, through the scrip component of the offer, will own about 17% of the combined group and have the opportunity to share in the value creation from the combination of the two businesses.”
The IPL scheme is currently expected to be implanted by the end of June 2008.
Shares in IPL plummeted nearly 13% on the back of the news, ending $18.71 down at $130.29.
