CF Industries Holdings tops March M&A activity with $1.6B purchase of Waggaman ammonia plant

April 24, 2023

By: G.F. Gay Le Breton and Alexander Aguilar April 21, 2023

CF Industries Holdings, a global manufacturer of hydrogen and nitrogen products, has agreed to pay $1.675 billion for a Waggaman ammonia plant and related assets. Australia-based Incitec Pivot Ltd will sell the plant to CF Industries for $1.25 billion cash plus a $425 million agreement with CF Industries to provide 200,000 tons of ammonia annually for up to 25 years to its Dyno Nobel subsidiary. The transaction, announced in March, is subject to receipt of certain regulatory approvals and other customary closing conditions.

IPL’s ammonia production facility has a nameplate capacity of 880,000 tons of ammonia per year and employs 90 people. It is situated on an integrated chemicals complex owned by Cornerstone Chemical Co. Currently, ammonia produced at this facility is distributed ratably to three customers, including Dyno Nobel, with approximately 75% used in industrial applications.

The Waggaman site is 60 miles southeast of CF Industries Donaldsonville complex. The company estimated that the Waggaman plant will generate a gross margin per ton commensurate with CF Industries’ existing ammonia segment prior to synergies, which the company expects to capture through greater capacity utilization and operational and logistics optimization.

CF Industries anticipates implementing carbon capture and sequestration at the site on an accelerated timeline, increasing its network’s low-carbon ammonia production capability, supporting Louisiana’s climate goals, and earning 45Q tax credits for sequestered carbon dioxide

“We believe the Waggaman facility will fit seamlessly into our network, as well as our strategic focus on ammonia as a clean energy source, given its proximity and pipeline connection to our Donaldsonville complex, its distribution and logistics flexibility, and its favorable characteristics for the addition of carbon capture and sequestration (CCS) technologies to enable low-carbon ammonia production, “ said Tony Will, president and chief executive officer, CF Industries. The company anticipates implementing CCS at the site on an accelerated timeline, increasing its network’s low-carbon ammonia production capability, supporting Louisiana’s and the country’s climate goals, and earning 45Q tax credits for sequestered carbon dioxide.

Also in March, Danos Inc., a third-generation, family-owned energy services company based in Gray, Louisiana, acquired Wood Group PLC’s Gulf of Mexico offshore labor supply operations for $17 million, Aberdeen-based Wood Group retained working capital.

Wood’s Gulf of Mexico operations generated approximately $90 million in revenue and an adjusted EBITDA of $3.5 million in 2022. Including the working capital, this represented an EBITDA multiple of approximately 8x, according to Wood Group.

Eric Danos, CEO of Danos Ventures, said, “We have been in the people business for 76 years. Providing highly skilled personnel to build, maintain and operate our customers’ assets safely is what we do. And we’re excited that this recent acquisition expands our ability to do that.” Danos’ 2,700 employees serve nearly 175 customers across 21 states and the Gulf of Mexico.

This transaction is the fourth acquisition for Danos since 2014. The company is actively seeking more acquisitions in the energy sector.

Locally, LeBlanc & Theriot Equipment Company (LB&T), the Gulf Coast region’s premier petroleum equipment installation, distribution and solution providers, agreed to sell its assets to JF Petroleum Group. LB&T was founded in 1964 and is headquartered in Metairie.

North Carolina-based JF Petroleum Group is a leading provider of fueling system solutions in North America and a portfolio company of private equity group MidOcean Partners. It serves retail fueling stations, commercial and government fleets, and emergency power customers through its network of 39 branch offices, 4 distribution centers, and over 1,200 employees. According to JF Petroleum’s CEO Keith Shadrick, the acquisition will increase JF’s capacity to serve its growing customer base in the commercial sector along the Gulf Coast.

Louis Theriot, President of LB&T, expressed excitement about the future, stating that joining the industry’s leading turnkey solution provider will allow the team to grow their market share and provide better service and support to their new and existing customers.

G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Alexander Aguilar is a financial analyst with the firm. Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC. For more information, visit http://chaffe-associates.com.