The Algerian government sold its fertilizer maker Fertial, a subsidiary of the Asmidal Group, to the Spanish fertilizer company Fertiberia in a transaction worth $160 million.
The transaction came after years of talks between the two parties. As part of the agreement reached, the Algerian party will relinquish 66% of the two subsidiaries to Fertiberia, a company controlled by Villar Mir. The remaining 34% will stay under Algerian control. The Spanish firm is also slated to take over another subsidiary Alzofert, and Algeria is also planning to privatize companies active in the steel industry, including Kimial, Somias and Asfertrade.
The purchased unit, Fertial, will keep its name but its logo will change in the short term. Labor union officials and senior managers at Fertial have refrained from public comment but privately all agree that the only way to maintain these units growth is to secure foreign participation. Indeed Fertial has been growing fast and is ranked as the third largest producer of fertilizers in the Mid-East-North Africa region. Some analysts say it is the seventh largest producer in the world, generating DZD 8.4 billion in 2005, almost double its 2002 sales. This year, the company forecasts sales to reach DZD 8.6 billion, DZD 2.1 billion already generated in 1Q05.
For Asmidal, Fertial has been a well performing unit allowing it to expand its export capacity over time. Fertial's major foreign markets for its ammonia are Spain, France, Italy, Greece, Turkey, Belgium, Britain, the U.S., Brazil, Morocco and Cuba. It also sells nitrate to neighboring Morocco and Tunisia. The company is now contemplating a strategy to penetrate Asian markets. In terms of output, Fertial produced 599,607 tons of all products combined in 2003, boosting it to 800,733 tons in 2004.
Given these results, Fertial has been Asmidal's best performing subsidiary. Of the five subsidiaries, Fertial generated one third of Asmidal's revenue in 2004.
The acquisition of Fertial is a strategic one for Fertiberia. Its ammonia production now jumps to 2.6 million ton per year, more than 2 million tons of ammonia and to nearly 1 million tons of fertilizers. Over the next five years, the company will invest an estimated $1 billion to further raise capacity.
© The North Africa Journal 2005
