Northbrook-based IMC Global Inc., the nation’s largest fertilizer producer, on Friday moved to expand into what has been a minor category–salt.
Privately held Harris Chemical Group Inc. will be purchased for $450 million in cash and the assumption of $950 million in debt. The $1.4 billion deal will make IMC the nation’s third-largest salt producer behind Chicago-based Morton International Inc. and Cargill Inc. of Minneapolis.
Wall Street reacted negatively. IMC stock fell $2.19 to $30.37.
“I think there was some fast money in the stock by players who expected us to buy back our shares instead of making a major acquisition,” said Lynn White, acting chief financial officer of IMC.
IMC noted that cost-reduction opportunities are expected to approximate $50 million on an annual basis by 2000. White said much of the savings will come in transportation.
There will be operational savings through better rail car utilization, White said, plus the fact that “Harris has a much better packaging and bagging system than we do.”
He said there will be some layoffs, particularly where there are staff-function duplications like at the Harris headquarters, which will no longer be needed.
Harris, owned by D. George Harris & Associates Inc. in New York, operates nine North American facilities, with combined production capacity of more than 11 million tons of salt. It also has operations in Britain and Australia. IMC produces about 800,000 tons.
The salt industry has been consolidating. Cargill in April bought the North American business of Akzo Nobel NV and in March, Chicago-based Morton bought French saltmaker Compagnie des Salins du Midi et des Salines de l’Est.
Meanwhile, on Dec. 22, IMC stockholders will meet on the proposed merger of Freeport-McMoRan Inc. into the Northbrook company. Freeport shareholders will receive 0.9 of a share of IMC common for each share they own, plus a warrant entitling the holder to buy one-third of a share of IMC at $44.50 a share.
