Critics question huge Yara takeover

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Norwegian fertilizer company Yara ASA launched one of the country’s biggest takeovers in history on Monday, agreeing to buy up US competitor Terra Industries for more than USD 4 billion (NOK 24 billion).

The deal boosts Yara’s position as the world’s dominant player in the industry, greatly enlarging its production capacity in the US alone, but it also hinges on a new stock issue that’s sparking complaints from members of the opposition in Parliament.

The Norwegian state is Yara’s largest individual shareholder and thus is being asked to come up with around 36 percent of the stock issue, which could leave the state putting up as much as NOK 5.4 billion. Members of the Conservative Party are skeptical, saying the government should use the stock issue as an opportunity to reduce its holdings in Yara.

The government minister in charge of business and industry, Trond Giske of the Labour Party, backs the deal, though. He called Yara “an important Norwegian company” that’s a “world leader” in its branch. Yara, claimed Giske, has yielded good dividends to the state since it was spun off from Norsk Hydro in 2004, “and we support investments that secure continued industrial development.”

Stock in Yara, which has bought up several other firms in recent years, fell 6 percent by mid-day on Monday, after the Terra acquisition was announced. Yara CEO Ole Jørgen Haslestad said he could understand that not all investors were enthusiastic about pumping more money into the company, “but we must think long-term” and focus on Yara’s solid track record since it was listed itself.

Views and News from Norway staff