Indonesia's Pupuk Kaltim in talks to buy Australian Incitec Pivot's fertiliser business -sources

Dyno Nobel

24/07/2023 10:21

By Yantoultra Ngui and Scott Murdoch
       SINGAPORE/SYDNEY, July 24 (Reuters) - Indonesian
state-owned fertiliser company PT Pupuk Kalimantan Timur
 PUPUK.UL , or Pupuk Kaltim, is in talks to acquire the
fertiliser business of Australian-listed Incitec Pivot Ltd
 IPL.AX , two sources familiar with the matter said.
    Pupuk Kaltim, which is Southeast Asia's biggest urea
fertiliser maker, has engaged Citi  C.N  to advise on the
potential acquisition, one of the sources said, declining to be
named as the matter is private. 
    Incitec Pivot commands a market value of A$5.73 billion 
($3.86 billion) as of Monday. The Southbank,
Victoria-headquartered company produces and distributes
fertilisers and explosives and employs more than 5,800
employees, according to its website. One analyst said the
fertiliser business could be worth around $1.2 billion.  
    Deliberations are still ongoing and no final decision has
been made on the matter, the sources added. 
    Incitec's spokesperson told Reuters in response to a query
on Monday that the company is not commenting beyond a statement
it issued on July 12 saying it has "received a number of
approaches for the potential acquisition of its fertilisers
business".  
    Pupuk Kaltim and Citi declined to comment. 
    The talks come as Pupuk Kaltim is on an expansion trail. The
Kalimantan-based firm announced in March that it was planning to
invest at least $1 billion to increase capacity and set up a
soda ash plant. 
    It is also planning a domestic initial public offering which
could raise about $500 million, sources told Reuters in January.
    Pupuk Kaltim has 13 factories, including five ammonia plants
with a capacity of 2.74 million metric tonnes a year and five
urea factories producing 3.43 million metric tonnes per year,
its website shows.
    Incitec is facing investor opposition to plans to de-merge
its explosives manufacturing business, Dyno Nobel, by way of a
separate listing to speed up growth in the explosives and
fertiliser businesses. 
    Last month, it announced the resignation of chief executive
officer and managing director Jeanne Johns. 
    Shares of the company have dropped 21.5% year to date. Weak
performance of the fertilisers business amid a drop in commodity
prices and adverse weather weighed on the company's first
half-year profit. 
($1 = 1.4846 Australian dollars)

 (Reporting by Yantoultra Ngui in Singapore and Scott Murdoch in
Sydney; additional reporting by Fransiska Nangoy in Jakarta;
editing by Kane Wu, Kirsten Donovan)
 ((Yantoultra.Ngui@thomsonreuters.com;))