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$8 Billion Iowa Fertilizer Merger Cancelled

The sale of a larger fertilizer plant located in southeast Iowa has been called off. The $8 billion deal has been cancelled by both parties – CF Industries and OCI N.V. The deal initially also involved Illinois-based CF Industries, purchasing the North American and European operations of Netherlands-based OCI, which would have also included a takeover of the ownership of OCI’s $2 billion fertilizer plant in Wever.

The Wever plant, operated by Iowa Fertilizer Co, is currently under construction and it has been rather controversial due to the large number of federal and state tax incentives. Despite the delays, the plant should open later this year. CF Industries has its own Iowa fertilizer plant in Port Neal, which is now expanding with the new facilities planned to be operational later this year. CF Industries and OCI N.V. said that “changes in the regulatory and commercial environments” forced them to cancel the deal. They specifically mentioned new tax regulations issued by the US Treasury Department that intend to curb corporate “inversions”. These are the practices of firms re-incorporating in a foreign country, such as through a merger, with the aim to lower their taxes.

In the intended CF-OCI deal, CF Industries should have become a subsidiary of a new company with headquarters in the Netherlands. CF Industries will pay $150 million termination fee to OCI because of the deal’s cancellation. CF Industries has its own Iowa fertilizer plant in Port Neal, which it is currently expanding with a $2 billion project. The expanded parts of the Port Neal plant are expected to be operational later this year. Both CF Industries and Iowa Fertilizer Co. confirmed that the cancellation of the deal would not have an impact on the Port Neal project or the Wever project.

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