Incitec Pivot Ltd has announced that it intends to implement a structural separation of its Incitec Pivot Fertilisers and Dyno Nobel businesses to create two separately listed companies on the Australian Securities Exchange (ASX). The proposed separation “will establish two customer-focused, technology-driven businesses set up for success in two essential industries.”
Dyno Nobel is a global leader in technical explosives solutions for mining and other industries, with solid margins and advantaged industry exposures. Dyno Nobel features strong customer relationships and partnerships and an attractive technology backed growth outlook. Incitec Pivot Fertilisers is a leading fertiliser and soil health company, with an extensive and vertically integrated network supporting the East Coast market.
The statement said: “Since the strategic review of the Fertilisers business in 2019, IPL has carefully considered the options available to continue to best serve its high-quality customers and create value for shareholders. The decision to pursue a structural separation of IPL is the result of a comprehensive review, with robust underlying market conditions supporting each business to move forward with appropriately strong balance sheets.”
The rationale to separate and extend IPL’s category leadership includes “significant growth potential for both businesses by accelerating our core technology offering to two different essential industries; declining synergy in sharing an ammonia manufacturing core as our explosives and fertiliser customers require specialised and differing solutions.” The company adds: “To extend our leadership each business must dedicate its capacity, resources and focus to developing technology to underpin different customer requirements. Megatrends driving demand and specialisation of IPL’s products are expected to intensify, and a separation will best position our shareholders to capture significant value. IPL’s current balance sheet is strong and has ample capacity to position both businesses for success.”
Under the proposal IPL will become Dyno Nobel Ltd. The Incitec Pivot Fertilisers business will be demerged under a standalone entity, Incitec Pivot Fertilisers Ltd, which will seek listing on ASX. IPL is targeting completion of the proposed separation of the two businesses in the first half of 2023, subject to required approvals and consents.
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 Fertilisershas 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.”
