US tax rules force fertiliser merger to fall flat

A merger between US fertiliser company CF Industries and its Dutch counterpart OCI has been abandoned following a US treasury crackdown on tax inversion deals.

In August 2015, CF agreed to acquire several OCI businesses based in the US and Europe in an $8 billion (£5.5 billion) deal. As part of the takeover, CF would relocate to the UK, which offers lower corporate taxes than the US. The companies revised the deal in December 2015 to satisfy US treasury rules on tax inversion, stating the new company would reside in the Netherlands.

But the US government has since introduced further new rules to stop US companies moving their tax residences abroad. Introduced last month, the measures were seen as a response to Pfizer’s $150 billon planned takeover of Allergan, where the merged company would reside in Ireland.

The Pfizer–Allergan merger has since fallen through, and now the CF–OCI deal will follow suit. Tony Will, CF’s chief executive, said in a statement: ‘Although the original deal created significant value for both parties, changes in the regulatory and commercial environments forced us to re-evaluate the combination.’