Deal talks for Incitec Pivot’s fertiliser arm with Indonesian ammonia giant reach crucial stages
Incitec Pivot remains locked in lengthy negotiations to flog its entire fertiliser business to an Indonesian state-owned enterprise, but there are concerns Foreign Investment Review Board approval could be a hurdle.
The listed company has had the division — reported valuations of which vary between $1 billion and $1.5b — on the market for several years. This round of negotiations are with Pupuk Kalimantan Timur, a massive ammonia and urea producer in Asia and supplier to Australia.
Incitec told the market on Thursday that negotiations were in the advanced stages and hinged on agreeing to and executing final binding transaction documents, as well as the all-clear from the Foreign Investment Review Board among other approvals.
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By continuing you agree to our Terms and Privacy Policy.Moody’s Ratings vice-president Ian Chitterer noted the discussions, but suggested FIRB approval was an area of concern.
“We note that the discussions to sell its fertiliser business ... are still progressing, but no final documents have been signed,” he said.
“If an agreement is reached, we believe that as PKT is an Indonesian state-owned enterprise, FIRB approval may be uncertain given the importance of Incitec Pivot’s fertiliser supply in the Australian food chain.”
Incitec chief executive Mauro Neves, who handed down the company’s $148 million loss for the first half on Thursday, acknowledged that shareholders were keen to see the sale get done.
“We have continued to progress the structural separation of our two-industry leading business,” he said.
“We are in advanced negotiations for a potential sale of our fertilisers business to PT Pupuk Kalimantan Timur, who are a major fertilisers producer in Asia and current supplier of urea to Australia.
“We understand that our shareholders, employees and other stakeholders are keen to see an outcome and the team is focused on concluding the sale process as soon as possible.”
He affirmed a $900m on-market share buyback announced in 2023 would stay on hold until the sale had been completed.
Moody’s Ratings’ Mr Chitterer said the agency saw the decision to pause the buyback as “credit positive”.
Incitec Pivot shares were up 3 per cent to $2.90 at 10.30am.
Originally published as Deal talks for Incitec Pivot’s fertiliser arm with Indonesian ammonia giant reach crucial stages
