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Incitec Pivot Ltd. will separate Dyno Nobel and Incitec Pivot Fertilisers

Published by , Editorial Assistant
World Fertilizer,

Following the proposed separation, both businesses are expected to benefit from:

  • Providing investor choice across two attractive category leading ASX exposures, which will potentially drive a market re-rating of each business.
  • Streamlined capital allocation decisions, unencumbered by competing business priorities.
  • Strong ability to respond to customer needs and driving value creation through dedicated focus, oversight and strategies tailored to two differing centres of excellence and technology.
  • Optimisation of capital and returns by matching capital structures with different business profiles.

IPL expects these benefits to ultimately accelerate technology driven growth by unlocking significant improvements to the customer’s experience. Enhanced yields, safety, sustainability and infield service will drive customer retention and growth. Our businesses will continue to grow with our customers, and our shareholders will stand to benefit from improved margins from value-add technology, earnings resilience, reduced volatility and improved returns through the cycle.

On completion of the proposed separation, IPL expects both Dyno Nobel and Incitec Pivot Fertilisers to have strong balance sheets to support strategic investment opportunities. Dyno Nobel is expected to retain all bank facilities and bonds outstanding at separation and anticipates the continuation of an investment-grade credit rating. Incitec Pivot Fertilisers is expected to target a conservative leverage profile and a strong balance sheet from the date of separation.

The proposed separation of Incitec Pivot Fertilisers and Dyno Nobel is expected to be implemented via a court-approved scheme of arrangement, subject to relevant approvals.

Under the proposal:

  • IPL will become Dyno Nobel Limited.
  • The Incitec Pivot Fertilisers business will be demerged under a standalone entity, Incitec Pivot Fertilisers Limited, which will seek listing on ASX.
  • If the separation by way of demerger is approved and implemented, IPL shareholders will receive shares in Incitec Pivot Fertilisers Limited in proportion to their existing shareholding in IPL, and will also retain their existing IPL shares, which will be rebranded Dyno Nobel Ltd.

Preparatory separation and cost analysis has been conducted, with the transaction now moving into the execution phase. Based on preliminary estimates and analysis undertaken to date, one-off costs are expected to be US$80 million - US$105 million and ongoing-costs are expected to be approximately US$25 million - US$35 million p.a.

A separation process has been designed to minimise cost and disruption to normal operations. IPL’s priority is to ensure minimal operational disruption and that our businesses continue to capture the exceptional value currently being generated at this current point in the cycle.

Assessment of key leadership appointments is progressing and will be announced in due course.

IPL is targeting completion of the proposed separation of the two businesses in the first half of 2023, subject to required approvals and consents. For further information in relation to the proposed separation of IPL, please refer to the presentation lodged with the ASX today entitled "Building The Future of Two Leading Companies”.

Commentary from IPL Chairman, Brian Kruger: “The Board sees significant value enhancement through the separation of two industry leading businesses and brands in Dyno Nobel and Incitec Pivot Fertilisers. Our explosives and fertilisers businesses will continue to provide attractive exposure to the essential minerals and agriculture industries that are underpinned by important global megatrends. Dyno Nobel and Incitec Pivot Fertilisers will be well positioned to drive more solutions for our customers which drives value for our shareholders. Our category leading businesses are positioned to grow and address both the opportunities and challenges of decarbonisation of the world’s economy.”

Commentary from IPL Managing Director and Chief Executive Officer, Jeanne Johns: “With the increased focus on providing our explosives and fertiliser customers with technology driven solutions, the synergy of sharing an ammonia manufacturing core has become less meaningful. IPL’s strategy has been to build a sustainable and technology driven company focused on building value for our customers. Dyno Nobel has leading technologies and market positions in the most attractive mining markets in the world. Incitec Pivot Fertilisers has an unrivalled distribution footprint in the large and attractive agricultural sector in Australia and an exciting technology led future in soil health solutions and biofertilisers. We have excellent financial capacity to provide each business with a capital structure to support their investment and growth characteristics and potential. Our businesses are critical to the delivery of sustainability and security to two key industries and both companies will continue to focus on delivering leading technology and services for our high-quality customers.”

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