Borealis has announced it will not go ahead with plans to sell its nitrogen fertilizer business to Russian-owned, Swiss-based fertilizer producer EuroChem.
The deal is among many other European chemicals agreements that have been cancelled due to the Russian invasion of Ukraine.
The proposed binding offer of €455 million was unveiled in early February, and the companies said a deal for the assets that have annual volume sales of €3.9 million and revenues of €908 million could be completed in the second half of 2022.
Borealis has been seeking to exit its fertilizer operations to concentrate on olefins and polyolefins, including the Borouge joint venture with United Arab Emirates state-owned oil titan ADNOC.
Commenting on the collapse of the sale plans, Borealis CEO Thomas Gangl said that, after “closely assessing” the most recent developments around the war in Ukraine and the sanctions that have been put in place, management had decided to decline EuroChem’s offer. Borealis will now consider “various options” regarding the future of its nitrogen business.
According to reports, the latest EU sanctions directly affect EuroChem’s owner Andrey Melnichenko, who is considered to be one of the wealthiest Russians with a net worth of more than $13 billion.
Among the activities to change hands, the melamine and technical nitrogen lines would have been new businesses for EuroChem, which ranks as Europe’s largest fertilizer producer.
In presenting the sales proposal, CEO Vladimir Rashevskiy said the buy would “considerably strengthen” his company’s foothold in the key European market – something that undoubtedly would not be well received in the current political climate.
EuroChem currently has key manufacturing facilities in Russia, Belgium, Kazakhstan and Lithuania. The company withdrew from the Ukrainian market in 2018, citing the government’s plans to restrict foreign supplies of fertilizer, along with expectations of a further deterioration of the business climate.
The Borealis business has more than 50 distribution points across Europe, supplying about 4 million t/y of products, including about 800,000 t/y of technical nitrogen solutions and roughly 150,000 t/y of melamine.
With the proposed deal, EuroChem would have gained five additional production plants in Austria, Germany and France, as well as access to a comprehensive sales and distribution network that mainly uses the Danube River.