Yara International ASA and Praxair, Inc., the world's third largest industrial gases company, have signed a Heads of Agreement with the intention of establishing a joint venture to further enhance development opportunities for Yara's industrial gases business.
The planned joint venture would be owned 50 percent by each partner and comprise Yara's existing industrial gases business located in Norway, Denmark and Sweden. $quot;We are very excited about this new joint venture,$quot; says CEO and president of Yara International, Thorleif Enger. $quot;Both companies have high ambitions to develop the Scandinavian industrial gases activity further. We are now in a unique position to act together and seize new business opportunities in other regions and in areas with mutual growth interests and ambitions.$quot;
The intention is to establish the new company during Q3 2007, with completion of the transaction subject to certain conditions and obtaining regulatory approvals. The venture would operate under the name $quot;Yara Praxair AS$quot; and would be based in Oslo, Norway. It would be headed by Per KvÃ¦rum and the Board of Directors would consist of representatives from both companies and the employees. The agreement would result in a one-time net income for Yara of more than NOK 700m ($117m), which is expected to be booked in the third quarter.
Yara and Praxair will review the strategy to expand the industrial gases business further into new product segments and geographical areas. In 2006, Yara's existing industrial gases business had sales of NOK 940m ($156m).
$quot;Combining the strong market position and name recognition that Yara enjoys in Scandinavia with Praxair's operational expertise and technology offerings, particularly in the areas of energy and environmental applications, creates a very compelling partnership,$quot; says Chairman and CEO of Praxair, Inc., Steve Angel. $quot;One area of particular interest is combining our technology and experience in enhanced oil recovery projects for certain North Sea oilfields. Also, considering the broad global reach of both organizations, we fully expect there to be additional collaborative ventures in other parts of the world in the future,$quot; says Angel.
Yara's CO2 business in Europe will continue as a wholly owned business unit in Yara. Yara will continue to further develop its European CO2-activity, and will supply the new joint venture with CO2 and argon in Scandinavia.