LA Private

Fertiliser frenzy: Incitec Pivot to partner with Pupuk Kaltim

Incitec Pivot (ASX:IPL) is reported to have chosen the Indonesian state-owned company Pupuk Kaltim as the preferred buyer of its significant Australian fertilisers business.

Sydney brokers and analysts say the sale could end up at a price of around $1.5 billion, but it may bring on a showdown with rural politicians and farmers in parts of Australia.

According to media reports, Incitec Pivot has arranged site trips and due diligence for Pupuk Kaltim in recent days. The company turned away other suitors in favor of negotiating a bilateral deal with the group.

The sale of the fertiliser division would end IPL’s plans to demerge the business into a separate and listed company. However, any agreement to sell to an Indonesian suitor would require FIRB approval, and that might be problematic given the way food security has emerged as an issue since the pandemic erupted.

Reuters reported ten days ago that Pupuk Kalimantan Timur, or Pupuk Kaltim, was in talks to acquire IPL’s fertiliser business.

Furthermore, Reuters reported that Pupuk Kaltim, Southeast Asia’s biggest urea fertiliser maker, has engaged Citi to advise on the potential acquisition.