Rivals line up for Incitec Pivot’s fertiliser unit

Incitec Pivot’s fertiliser business is likely to attract interest from rivals in the sector including Wesfarmers and Norwegian chemical company Yara International should it come up for sale.

Australian agricultural company Elders is also understood to be eager to explore a potential acquisition of the operation in part, while its rival Landmark, owned by Canada’s Nutrien, is also expected to be in the mix.

Estimates so far suggest the business could be worth about $700 million.

Incitec Pivot on Monday revealed it had hired UBS to embark on a strategic review of its chemicals operation.

Nutrien is one of the world’s largest chemical fertiliser operations, while Wesfarmers has been tipped as a buyer of Incitec Pivot in the past due to the synergies with its existing chemicals division.

Elders is understood to have examined acquisitions in the chemicals sector about four years ago and current managing director Mark Allison used to run Incitec Pivot’s facilities when he worked at the company in 1996.

The listed group is known to have an interest in bulking up in fertiliser on the country’s sugar cane coast where it is weak in that area. However, the company would not be eager to buy its Gibson Island manufacturing operation in Queensland due to its capital-light structure.

Other left-field possibilities are that groups such as GrainCorp look at the business, while private equity may also line up.

Investors have been backing the move to spin off the division, with its earnings volatility weighing on its share price performance due to its exposure to the unpredictable agricultural sector.

Last year, the Incitec Pivot chemicals division dispatched 2.2 million tonnes to the domestic market for agriculture.

Speculation has been mounting about the division for some time.