Incitec Pivot to revive fertiliser sale campaign

Incitec Pivot is increasingly keen to distance itself from the fertiliser business and carry on as a pure-play explosives and industrial chemicals manufacturer. Picture: Heidi Petith

The $6bn listed industrials group Incitec Pivot is set to announce a revived sale process for its fertiliser business when it reports annual earnings on Monday and is prepared to break up the division, valued at $1.1bn.

It confirms earlier reports in DataRoom that a fresh sale process would start in 2025 with private equity funds such as Pacific Equity Partners positioning to buy the business.

Incitec Pivot is increasingly keen to distance itself from the fertiliser business and carry on as a pure-play explosives and industrial chemicals manufacturer, and has signalled this to investors.

It has tried to sell the business before.

There has been some informal interest from strategic players, with suggestions that groups such as Ridley or Nutrien may be keen to buy Incitec Pivot’s distribution assets.

Strategic buyers include Nutrien, CF Industries and The Mosaic Company.

Incitec Pivot held talks with Indonesia’s Pupuk Kaltim for a sale of the unit earlier this year for a price thought to be more than $1bn, but there was no deal.

Analysts believe it makes sense to split off the more successful distribution unit of the fertiliser business and sell it to a different party.

Another party would own the heavy manufacturing, consisting of the Phosphate Hill monoammonium/diammonium phosphate plant and a sulphuric acid plant at Mount Isa.

Incitec Pivot closed its Gibson Island ammonia manufacturing plant in Brisbane last year.

The company had faced gas supply disruptions at its Phosphate Hill operations and a shortfall in sulphuric acid from Mt Isa, slashing its earnings.

Morningstar says the fertiliser unit accounts for about a third of the stock’s fair value – which means it comes in at about $1.2bn.

The sale comes as KPMG has been tapped to sell smaller rival Wengfu Australia.

Wengfu distributes fertiliser along the east coast, with assets in Brisbane, Newcastle, Geelong, Portland and Adelaide.

Market sources say that it is expected to sell for between $50m and $80m.

However, if it sold for a similar price to the Incitec Pivot unit it would be closer to $200m.

Its parent company is Guizhou Phosphate and Chemical Group.

The understanding is a data room is open. There are three overseas buyers but no domestic interest. The deal is likely to be completed in the first half of next year.