Austria-based Borealis has announced that it has received a binding offer from EuroChem to purchase its fertiliser, melamine and technical nitrogen business.
Borealis has long been inching towards the right moment to divest itself of this part of its operations, and that moment - and the right buyer - have apparently now arrived.
The offer values the business on an enterprise value basis at €455 million.
EuroChem is a leading global fertilizer producer, and one of only three companies worldwide with manufacturing capacity in all three primary nutrient groups: nitrogen, phosphates and potash. A vertically integrated company, EuroChem is expanding its production and distribution capacities in key regions around the world. The present transaction would significantly enhance EuroChem’s nitrogen business in Europe, adding production assets in Austria, Germany and France as well as adding a comprehensive sales and distribution network utilizing the Danube river.
According to Thomas Gangl, CEO at Borealis, the deal follows logically from Borealis’ goal to pursue a more circular economy as the path towards a climate-neutral society.
The sale of the fertiliser business, he said ‘will significantly affect our CO2 emissions and reduce our CO2 footprint by more than 50%’.
He explained that reducing emissions to zero in the fertiliser business presents challenges, as it will require new solutions and considerable investment.
“We cannot solve all the problems on our own, so we decided to focus on the polyolefin-based chemicals, to work to transition this business into a more circular model and to let others find ways in other areas,” he said. “This sale will help us to focus on reducing our CO2 footprint immediately and will free up our hands for the other topics.”
The company will therefore continue to focus on its core activities in the fields of polyolefins and base chemicals and on the transformation in these areas towards a circular economy.
Borealis will initiate mandatory information and consultation procedures with employee representatives shortly. The transaction is also subject to certain closing conditions and regulatory approvals, with closing expected for the second half of 2022.