Incitec Pivot demerger showing dwindling support

Incitec Pivot's ammonia manufacturing facility at Louisiana in the US.

Incitec Pivot’s board is believed to be in talks over a demerger of its fertilisers unit, which could see the deal called off.

While chairman Brian Kruger and chief executive Jeanne Johns support the transaction, sources say there is resistance among directors to proceed, leaving many betting it is unlikely to proceed.

Incitec recently paused its share buyback due to “something material”, and the understanding is that opposition to the demerger within the board may be behind the move.

The $5.9bn fertiliser and explosives manufacturer has said the demerger plan had been delayed and would likely happen sometime after it sold its US ammonia plant Waggaman. Incitec agreed to sell Waggaman for $US1.675bn in March to CF Industries.

The debate comes as fertiliser prices have declined and the industry is suffering from higher energy costs.

Joining the board this year has been activist investor John Ho, the founder of Janchor Partners.

His business interests have 10.3 per cent of Incitec, including 8.9 per cent voting rights.

Mr Ho is known to have been against a move to demerge or sell the fertiliser division, and has the view there is upside ahead.