Incitec Pivot’s competitors with an interest in picking up its fertilisers unit may wind up on the sidelines of the auction, despite putting forward initial offers.
The understanding is Incitec is favouring suitors unlikely to have any issues in connection to the Australian Competition & Consumer Commission.
That could put companies like Nutrien and Elders, which have shown some interest in the past, at a disadvantage.
Both sell rural services goods and crop inputs. If they buy Incitec Pivot, a third player goes from the market, which may concern the ACCC. Other rural services companies would not want to buy fertiliser from their competitor.
As earlier reported by DataRoom, information memorandums were released in January.
Based on the documents seen to date, it might appear the asking price is too high, but the understanding is Incitec Pivot is a committed seller.
Even if bids do not come in at prices hoped for, the suggestion is the company will offload the unit regardless. Incitec Pivot told the market on Monday there had been strong interest from a range of trade and financial parties. It hopes for a binding sales agreement by the middle of this year.
First round expressions of interest for the Gibson Island real estate process are expected to close on March 14.
Private equity firms Pacific Equity Partners and BGH Capital are expected to be interested.
Last time, suitors were not keen to buy the manufacturing part of the Incitec Pivot fertilisers business, but were keen on distribution. This time, there’s the chance to buy the distribution unit — where all the value is considered to be — separately.
Jarden is working on the sale, which comes soon after Mauro Neves de Moraes took over as CEO of Incitec Pivot.
UBS and Macquarie Capital have previously made efforts to sell the fertiliser business and Macquarie is still involved.
In its results delivered late last year, Incitec Pivot wiped $941m off the value of the fertiliser unit, suggesting it was now at about $400m.
The writedown included $100m for its US operations.
Most of the rest was linked to the Australian manufacturing operations.
Its manufacturing operations are at Phosphate Hill, where it has faced gas supply disruptions and a shortfall in sulfuric acid from Mt Isa.
Incitec Pivot is looking to focus on its more successful commercial explosives operation, Dyno Nobel.
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