Yara International ASA has entered into an agreement to acquire Canadian nitrogen producer Saskferco for $1.6bn in enterprise value, strengthening Yara’s production and marketing position in North America and serving as a solid platform for further growth.

Through the transaction, Yara will acquire a world-class nitrogen manufacturing plant near Belle Plaine, Saskatchewan, in Canada and storage facilities in Saskatchewan and Manitoba.

The Saskferco plant is one of the world’s most gas efficient producers of ammonia, urea and UAN, with strategic proximity to western Canada’s large and cost competitive gas reserves. When completed, the deal will add 650,000 tonnes of ammonia, 980,000 tonnes of urea and 230,000 tonnes of UAN in annual production capacity.

In addition, current capacity expansion projects will increase ammonia and urea production to 725,000 and 1,115,000 tonnes annually from mid 2009 for an investment cost of $84m.

“This acquisition represents another significant step in Yara’s growth strategy, and Saksferco’s production and distribution capabilities are an excellent strategic fit with our existing assets in North America,” explained CEO and President of Yara International ASA, Thorleif Enger.

Enger is soon to be the outgoing CEO of Yara as he retires this summer to be replaced by Jorgen Ole Haslestad, effective as of September 2008. Still looking to the company’s future however, Enger added, “It provides a strong foundation for further growth through an efficient manufacturing facility located close to major gas production and with proximity to an important regional agricultural market for urea and UAN.”

Saskferco, a private company owned 50 % by the Mosaic Company, 49 % by the provincially owned Investment Saskatchewan and 1 % by Canadian Imperial Bank of Commerce (CIBC), was established in 1988. The nitrogen manufacturing facility in Saskatchewan was completed in 1992, with a capacity expansion in 1997, which made it the largest urea granulation unit in North America.

The transaction, which will be funded through existing credit lines, is expected to close in Q3 2008, subject to fulfilment of closing conditions.