Incitec Pivot confirms fertilisers approach

afr.com:

Incitec Pivot confirmed its fertilisers business has been the subject of unsolicited interest from potential buyers amid doubts over whether its plan to spin-off the asset into a standalone company will succeed.

The Australian Financial Review’s Street Talk column revealed on Tuesday at least one Asia-based state-owned enterprise has entertained buying Incitec Pivot Fertilisers, speculated to be Pupuk Indonesia, a massive fertiliser producer in the region.

The fertilisers arm is also subject to volatile business and commodity price cycles, challenging its viability as a standalone company, which would have a higher cost of capital. James Davies

While Incitec declined to identify any parties, it confirmed “a number of approaches”. Incitec shares rallied 5.4 per cent to $2.92 on Wednesday.

“The board’s assessment of a potential sale is being considered alongside the proposed demerger, which remains a strategic priority for the board. The board will continually assess all options to ensure shareholder value is maximised,” the group said in a statement to the ASX.

The company’s long-standing plan to separate Dyno Nobel, its explosives business, and the in-play fertilisers asset has appeared increasingly uncertain after the departure of Christine Corbett last month, who was the chief executive designate of Incitec Pivot Fertilisers.

And earlier in June, group CEO Jeanne Johns made a swift exit with less than one month’s notice. In the meantime, chairman Brian Kruger has appointed chief financial officer Paul Victor to run the group in an acting capacity.

Incitec had been forced to buy expensive gas on the spot market to replace the volumes its contracted supplier failed to deliver, leading to a significant miss on its interim