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CVR Partners to acquire Rentech Nitrogen Partners
Aug. 11, 2015
CVR Partners,Nitrogen fertilizers company of US, recently announced that the company will acquire all outstanding units of Rentech Nitrogen Partners excludes the Pasadena facility to create a north American nitrogen fertilizer leader with more diversified assets, feedstocks, and markets.
Total consideration for Rentech Nitrogen excluding the Pasadena facility is $533 million, implying a total enterprise value of approximately $839 million, based on closing prices on August 7, 2015. At least $12 million of annual run-rate operating synergies expected.
Each outstanding common unit of Rentech Nitrogen will be exchanged for 1.04 units of CVR Partners and $2.57 of cash. Upon closing of the transaction, Rentech Nitrogen's unitholders (including Rentech, Inc.) will own approximately 40.5 million units, or 35.6%, of the combined partnership. CVR Partners will assume or refinance Rentech Nitrogen's net debt, which was approximately $307 million as of March 31, 2015.
The combination of two pure-play, complementary nitrogen fertilizer producers creates an entity of significantly increased scale and production capacity, improved overall operating reach and greater cash flow generation. The combined entity will also benefit from the world's most attractive grain market in the Mid Corn Belt, in addition to competitive and diversified feedstocks. Furthermore, both have identical distribution policies, where they pay out to unitholders all cash available for distribution each quarter, and their opposite year plant turnarounds reduce earnings volatility.
"Once the merger is complete, we will be the second largest producer of urea ammonium nitrate (UAN) in North America," said Jack Lipinski, executive chairman of CVR Partners. "The combination of our two strategically located fertilizer assets in Kansas and Illinois, a strong combined balance sheet and highly experienced management teams positions the merged companies to generate long-term value for unitholders."
"The addition of Rentech Nitrogen's East Dubuque fertilizer facility increases our scale and diversifies our geography and raw material feedstock," said Mark Pytosh, chief executive officer of CVR Partners. " The merger also expands our footprint into the upper Corn Belt region, which has the largest concentration of users in the U.S. for the direct application of nitrogen fertilizer products.
Source: CVR Partners LP
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