Terra takeover secures future for ici fertilisers - farmers weekly

28 NOVEMBER 1997 ------------------------- TERRA TAKEOVER SECURES FUTURE FOR ICI FERTILISERS By Philip Clarke BAGS of UK produced fertiliser will carry a new name from next year, after ICIs

sale of its fertiliser business to US agro-chemical giant, Terra Industries. All the brand names, such as Nitram and Late-Cut, are included in the multi-million £ deal. But the ICI name will

go from Jan 1, as the company secures the divestment it failed to achieve in 1990, when its proposed sale to Kemira was blocked by the competition authorities. "Since then, we have

turned the fertiliser business round," said commercial manager, Stuart Beer. "It was not on the ICI divestment list until early this year, when the firm bought Unilever and

fertilisers was no longer a core business." The price tag on the deal is put at between £200m and £250m. The lower figure is Terra Industries estimate of the companys value, with the

higher figure ICIs, explained Mr Beer. How much of the difference will actually be paid will depend on the relative price of ammonium nitrate over the next five years. Either way, the

industry view is that the price achieved is a good one. After various contractual obligations, ICI plc will pocket about £140m. The good news for farmers is that it keeps another domestic

competitor in the market-place. "ICI was rumoured to be considering closing its fertiliser business earlier this year," said Neil Taylor, sales and marketing manager for Usborne

Fertilisers. "That would have left us at the beck and call of the world market, unable to respond to farmer demand. With farmers moving increasingly to last-minute ordering, we just

would not have had the infrastructure to cope." What it will mean for prices remains to be seen. Industry consultant Mike Stickland believes the new American owners will be even more

aggressive on price. "ICI has been awfully gentlemanly to its competitors," he said. "It has a lower cost base than either Kemira or Hydro and could really thump them if it

wanted. To make money they need to operate at full capacity and that means undercutting the others." But this is refuted by Mr Beer, who believes Terra Industries will be reluctant to

get into a price war. "Our cost base is not so strong that we can take the competition out." Other operators agree. Tom Calvert of Cargill, which gets its own label fertiliser from

ICI, believes prices are already so low there is not much room for further aggression. And Hydro Agri chairman, Tony Robinson, believes that, having spent over £200m, Terra will be looking

for a decent return on their investment. But the UK market will remain competitive, he says, with imports accounting for about 40% of supplies. Most traders suggest it will be "business

as usual", assuming the sale escapes the attentions of the competition authorities. &#42 ICI FERTILIZERS _&#8226 Two plants at Billingham and Severnside._ _&#8226 Output of

AN 1m tonnes a year._ _&#8226 25% share of UK market._ _&#8226 Average turnover 1992 to 1996 of £205m._ _&#8226 Average profit 1992 to 1996 of £35m._ _&#8226 Assets of

£52m._ _&#8226 Staff of 580._ _Stuart Beer says his new bosses will be reluctant to get into a price war._ TERRA INDUSTRIES _&#8226 US owned, based in Iowa._ _&#8226 Five AN

plants and 425 farm service centres._ _&#8226 Output of 3m tonnes a year._ _&#8226 Annual turnover of $2.3bn (£1.4bn)._ _&#8226 Staff of 3600._