Pivot & ICT merger to deliver efficiencies in fertiliser ind

Document date:  Thu 29 Aug 2002
Published:  Thu 29 Aug 2002 00:00:00
Document No:  148172
Document part:  A
Market Flag:  Y
Classification: 

INCITEC LIMITED                               2002-08-29  ASX-SIGNAL-G

HOMEX - Brisbane                                                      

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The much-anticipated consolidation of the Australian fertiliser
industry moved a step closer today with the announcement of the
proposed merger of two of the country's leading manufacturers and
suppliers, Incitec Limited's fertiliser operations and Pivot Limited.

The merger will create a sustainable, wholly Australian-owned
specialist fertiliser company to be known as Incitec Pivot Limited,
listed on the Australian Stock Exchange.

Announcing the proposal, Mr John Watson, Chairman of Pivot Limited
and Chairman-elect of Incitec Pivot, said today that the merger was
an opportunity to end much of the infrastructure duplication in the
Australian fertiliser industry which had adversely impacted on costs
to the industry.

Following the merger, Incitec Pivot will be owned 70% by existing
Incitec shareholders and 30% by existing Pivot shareholders. Pivot
shareholders will receive 3.23 shares in the new company for each
Pivot share that they hold. In addition, Pivot shareholders will
receive a fully franked dividend of up to 56 cents for each Pivot
share held.

"The need to restructure the fertiliser industry has been recognised
over a long period," Mr Watson said. "With the rural sector suffering
from drought and tough market conditions, the time is now right to
capture the efficiencies industry reform will bring."

The transaction is subject to the Australian Competition and Consumer
Commission clearance and the approval of Pivot and Incitec
shareholders. The new company will have annual sales of approximately
$1 billion and handle an estimated 3 million tonnes of fertiliser a
year through established networks. Whilst post-merger there will be
efficiency gains in bulk handling, storage and administration,
Incitec Pivot will maintain regional distribution channels that will
enable farmers to purchase the combined product range of both
existing companies at any single outlet.

"The merger will unlock significant synergies in logistics and
administration but will not affect Pivot's or Incitec's fertiliser
manufacturing plants as they primarily serve distinct regions," Mr
Watson said.

"Under the terms of the merger, Pivot shareholders will receive
shares in Incitec Pivot in exchange for their current shareholdings.
They will have the ability to freely trade their shares on the
Australian Stock Exchange, something they have not been able to do in
the past."

Incitec Fertilizers is the largest of three business divisions of the
listed Brisbane-based Incitec Ltd, which is majority owned by Orica
Limited. In a separate transaction, details of which have been
announced today, Orica will purchase Incitec's industrial chemicals
business. The merger with Pivot will not proceed until this sale is
completed.

The sale of Crop Care Australasia Limited, which is 50 per cent owned
by Incitec and Orica to Nufarm Limited was announced yesterday. This
transaction is also subject to approval by the ACCC.

Incitec's Managing Director and CEO, Mr Greg Witcombe, who will be
the Managing Director and CEO of Incitec Pivot Limited, said that the
company would retain the merger partners' existing focus on
delivering to farmers in eastern and southern Australia "quality
fertiliser when they want it, where they want it, and at a
competitive price".

"Because the new company will maintain the successful distribution
networks put in place by both Incitec and Pivot, it will be well
positioned to offer a greater product range and enhanced levels of
service," Mr Witcombe said.

"For farmers, in many ways it will be business as usual as they will
continue to deal with their established local agents and dealers."

Mr Chris Leon, Pivot's Managing Director and CEO, said that a healthy
turnaround in Pivot's financial performance over the past two years
had put the company in a position to be able to take a leading role
in negotiations to reshape the Australian fertiliser industry.

He said that despite a dramatic improvement in profit in the current
financial year, the Company would find the going tough in future as a
stand-alone operation. 

"Fertiliser is a globally traded product, and we are competing with
international companies in the already crowded Australian market. As
a result of these factors, after the merger, the fertiliser market in
Australia will remain highly competitive and farmers will continue to
be able to benefit directly from continuing strong competition."

The merger parties have lodged a submission with the ACCC. A detailed
proposal will be put to Pivot's 31,500 Ordinary Shareholders and
11,500 Investor Shareholders, with a vote expected in November. The
merger is also subject to the approval of Incitec shareholders and
the passage of de-merger Legislation through the Federal Parliament.


CONTACTS:

Greg Witcombe                     Chris Oldfield 
Incitec Ltd                       Pivot Limited 
Tel 0412 137 509                  Tel 0419 309 303

www.incitecpivot.com.au

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