Norwegian fertiliser giant Yara International has announced its intention to merge with US manufacturer Terra Industries, giving the combined group an estimated global market share of almost 10%.

The merger, unanimously approved by both companies’ directors but still subject to shareholder approval, will deliver cost savings and enable both companies to strengthen their positions in the USA.

“Yara and Terra are a perfect fit, and the combination will elevate Yara to a truly global leader in the industry,” said Yara chief executive Jorgen Ole Haslestad.

“Terra’s ammonia and upgraded fertiliser distribution system will be combined with Yara’s global sourcing and optimisation capabilities, as the world’s largest producer and trader of fertiliser and ammonia.”

The deal, which is expected to be concluded by June, is based on a cash offer by Yara of US$41.1 per Terra share, representing a market capitalisation of $4.1bn.

It will be part-funded by a $2-2.5m Yara rights issue, backed by the Norwegian government, which has 36% ownership of Yara.

Terra owns and operates six nitrogen factories in North America, mostly in the central corm belt. Yara is predominately on the eastern and western seaboards.

The two companies have a history of working together in the form of GrowHow UK – a 50% joint venture combining the manufacturing capacity of Terra at Ince and Billingham, with Yara’s import and bagging operations.

Managing director of Yara UK, Tove Andersen, will oversee the integration process in the UK. “We plan to take out cost synergies, but it is premature to speculate where these will come from.”

Marketing manager Rosie Carne said the planned merger was good news for British farmers, since it would secure the future of the UK’s two manufacturing plants while cost savings in things like customer services, logistics and distribution could boost efficiency.

There may be some issues with regards future branding, she said, but the UK remained a highly competitive marketplace and pricing would still be dependent on global factors.

A Yara statement insisted it would be “business as usual” for the two companies until the bid has been accepted.