Melbourne-based explosives giant Orica (ASX:ORI) announced a comprehensive resolution to long-standing legal hurdles alongside a significant domestic acquisition.
The company confirmed it has reached a settlement agreement with CF Industries Sales and CF Industries Nitrogen, effectively ending litigation that commenced in October 2023.
Under the terms of the agreement, which involves no admission of liability, Orica will pay US$169.5 million during the second half of the 2026 financial year.
The settlement is designed to remove persistent litigation uncertainty and allow the firm to establish a more diversified and secure supply base for ammonium nitrate within the United States.
Simultaneously, Orica has reached an agreement with its joint venture partner, Nelson Brothers, to acquire 100% of their explosives business.
The acquisition involves a US$25 million payment plus the retirement of US$48 million in debt.
Management anticipates that the combined impact of the transactions will be earnings per share accretive within the first full financial year of ownership.
Furthermore, the integration of Nelson Brothers is projected to boost EBIT by approximately $35 million per annum, driven by operational resilience and cost synergies.
By resolving the CF Industries dispute and consolidating its hold on the Nelson Brothers business, Orica aims to simplify its corporate structure and capitalise on growth opportunities in the critical North American market.
The settlement and acquisition will be funded through existing cash reserves and undrawn bank debt facilities.