Orascom to buy Dutch chemical group units
Amsterdam, March 30, 2010
Orascom Construction Industries (OCI), Egypt's biggest listed firm, said it has reached an agreement to buy the fertiliser and melamine units of Dutch chemicals group DSM for 310 million euros ($417 million).
OCI chairman and CEO Nassef Sawiris said the acquisition of DSM Agro and DSM Melamine fitted perfectly in its strategy to become one of the global leaders in fertilizer production and distribution.
'It provides us with a strong position in the fertilizer market in Northwest Europe, further product and geographic diversification as well as a leading position in the melamine market worldwide, which as a downstream activity to urea provides a new area of growth for our company,' he remarked.
'I look forward to welcoming the employees of both business groups to the OCI group. Together we will continue to deliver exceptional value for our customers and shareholders,' he added.
Sawiris had earlier said it would consider bidding on fertilizer firms and mentioned mining group Anglo American's Brazilian fertiliser-maker Copebras as a possible target.
Analysts said the deal with DSM would boost Orascom's revenues and profits above their previous forecasts, and help the company sell more higher-margin nitrogen fertilisers.
'This is definitely a step forward for OCI's fertiliser segment, as it provides a base of fertiliser production within Europe,' Cairo-based investment bank Beltone Financial said in a note on the deal.
Shares in Orascom dropped 2 per cent in early trade, while Egypt's main index fell 0.5 per cent.
DSM, which is in the process of becoming a specialist in food supplements and performance materials, said this deal took it one step closer to shedding its chemical roots and making new acquisitions.
However, analysts said DSM would make a book loss of between 15 million and 20 million euros under the deal, which they said 'was a cheap buy for Orascom as it pushes to expand its fertiliser operations both in and outside Egypt.'
'We had expected a slightly higher price. We were at 425 million euros,' Rabo Securities analyst Fabian Smeets said, but still welcomed the sale because it will allow DSM to move ahead with its strategy.-Reuters and TradeArabia News Service
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