OREANDA-NEWS. February 07, 2011. Group DF, a private group of companies controlled by Dmitriy Firtash, has acquired Severodonetsk Azot, the Ukrainian producer of ammonia, urea, and ammonium nitrate, Interfax-Ukraine announced on Feb 4. Having not disclosed the deal price, Mr. Firtash indicated that 30% of funds used for the acquisition were loans from unnamed banks. The businessman also added that he was still interested in buying Cherkasy Azot. Moreover, Firtash will participate in the privatization of Odesa Portside Plant if and when it is officially announced by the Government of Ukraine. Both plants are major producers of nitrogen fertilizer in Ukraine.

Millennium Capital considers the news as POSITIVE for Stirol. Now Ostchem Holding, the managing company of Group DF chemical assets, controls three of the six Ukrainian nitrogen fertilizer plants, including Stirol, RivneAzot, and the newly acquired Severodonetsk Azot. The main issue with the Ukrainian fertilizer industry is the high natural gas price (up to USD 350 per Mcm). Therefore, primarily we see a positive aspect in the consolidation of the industry since Mr. Firtash, an influential Ukrainian tycoon, could actively lobby the interests of fertilizer producers to resume the government support, particularly in terms of vital price discounts for natural gas. On the other hand, the implementation of the aggressive plans of a further consolidation of the domestic industry through acquisition of the Cherkasy Azot and privatization of the Odesa Portside Plant will certainly catch the eye of strategic investors, likely Russian ones, drawing their attention to to Ostchem Holding.