Incitec Pivot Limited announces intention to separate its two leading businesses,
Dyno Nobel and Incitec Pivot Fertilisers, and build the future of two companies to
drive significant shareholder value
23 May 2022
Incitec Pivot Limited (ASX: IPL) announces 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: Global leader in technical explosives solutions, 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: Leading fertiliser and soil health company, with an extensive and
vertically integrated network supporting the East Coast market, a globally strategic food bowl.
Incitec Pivot Fertilisers is positioned to capitalise on leading a step-change in sustainable
fertiliser and precision agriculture, as well as developing partnerships for world-class fertiliser
sourcing, including the potential Perdaman arrangement1
.
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.
Further detail on strategy, growth, asset perimeter, capital framework and climate change initiatives
for each of the Dyno Nobel and Incitec Pivot Fertilisers businesses will be provided in the Scheme
Booklet. A further transaction update will be provided at the 2022 Investor Day.
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.
• 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.
1 IPL’s 20-year offtake agreement with Perdaman Chemicals and Fertilisers remains subject to a final investment decision by Perdaman (refer to IPL’s market
announcement on 5 May 2021).
Incitec Pivot Limited ABN 42 004 080 264
Level 8, 28 Freshwater Place, Southbank, Victoria 3006, Australia
www.incitecpivot.com.au
Following the proposed separation, both businesses are expected to benefit from:
• Providing investor choice across two attractive category leading ASX exposures, which will
potentially drive a market re-rating of each business.
• Streamlined capital allocation decisions, unencumbered by competing business priorities.
• Strong ability to respond to customer needs and driving value creation through dedicated
focus, oversight and strategies tailored to two differing centres of excellence and technology.
• Optimisation of capital and returns by matching capital structures with different business
profiles.
IPL expects these benefits to ultimately accelerate technology driven growth by unlocking significant
improvements to the customer’s experience. Enhanced yields, safety, sustainability and infield
service will drive customer retention and growth. Our businesses will continue to grow with our
customers, and our shareholders will stand to benefit from improved margins from value-add
technology, earnings resilience, reduced volatility and improved returns through the cycle.
On completion of the proposed separation, IPL expects both Dyno Nobel and Incitec Pivot Fertilisers
to have strong balance sheets to support strategic investment opportunities. Dyno Nobel is expected
to retain all bank facilities and bonds outstanding at separation and anticipates the continuation of an
investment-grade credit rating. Incitec Pivot Fertilisers is expected to target a conservative leverage
profile and a strong balance sheet from the date of separation.
Implementation and next steps
The proposed separation of Incitec Pivot Fertilisers and Dyno Nobel is expected to be implemented
via a court-approved scheme of arrangement, subject to relevant approvals2
. Under the proposal:
• IPL will become Dyno Nobel Limited3
.
• The Incitec Pivot Fertilisers business will be demerged under a standalone entity, Incitec
Pivot Fertilisers Limited, which will seek listing on ASX.
• If the separation by way of demerger is approved and implemented, IPL shareholders will
receive shares in Incitec Pivot Fertilisers Limited in proportion to their existing shareholding
in IPL, and will also retain their existing IPL shares, which will be rebranded Dyno Nobel
Limited.
Preparatory separation and cost analysis has been conducted, with the transaction now moving into
the execution phase. Based on preliminary estimates and analysis undertaken to date, one-off costs
are expected to be $80 million – $105 million and ongoing-costs are expected to be approximately
$25 million – $35 million p.a.
A separation process has been designed to minimise cost and disruption to normal operations. IPL’s
priority is to ensure minimal operational disruption and that our businesses continue to capture the
exceptional value currently being generated at this current point in the cycle.
Assessment of key leadership appointments is progressing and will be announced in due course.
IPL is targeting completion of the proposed separation of the two businesses in the first half of 2023,
subject to required approvals and consents. For further information in relation to the proposed
separation of IPL, please refer to the presentation lodged with the ASX today entitled “Building The
Future of Two Leading Companies”.
2 Demerger subject to final IPL Board approval and relevant shareholder, court, regulatory and third-party approvals. IPL change of name subject to shareholder approval.
Dates are indicative only and subject to change.
3 The change of IPL’s company name is subject to shareholder approval.
Incitec Pivot Limited ABN 42 004 080 264
Level 8, 28 Freshwater Place, Southbank, Victoria 3006, Australia
www.incitecpivot.com.au
Commentary from IPL Chairman, Brian Kruger:
“The Board sees significant value enhancement through the separation of two industry leading
businesses and brands in Dyno Nobel and Incitec Pivot Fertilisers. Our explosives and fertilisers
businesses will continue to provide attractive exposure to the essential minerals and agriculture
industries that are underpinned by important global megatrends.
“Dyno Nobel and Incitec Pivot Fertilisers will be well positioned to drive more solutions for our
customers which drives value for our shareholders. Our category leading businesses are positioned
to grow and address both the opportunities and challenges of decarbonisation of the world’s
economy.”
Commentary from 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 Fertilisers has 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.
We have excellent financial capacity to provide each business with a capital structure to support their
investment and growth characteristics and potential. Our businesses are critical to the delivery of
sustainability and security to two key industries and both companies will continue to focus on
delivering leading technology and services for our high-quality customers.”
courtesy of Bell Direct
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DYOR
i do not hold this share but have in the past ( i got out of this in January 2015 )
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