CF Industries Inc. has bought OCI NV’s North American, European and Global Distribution businesses for €8 billion, including debt.

The merger will create the world’s largest publicly-traded nitrogen company, both companies said.

Combined they will have production capacity of approximately 12m nitrogen-equivalent nutrient tonnes by mid-2016.

Under the terms of the agreement, the companies said that CF will become a subsidiary of a new holding company domiciled in the UK, where CF is the largest fertilizer producer following its recent acquisition of Growhow.

Upon completion of the transaction, OCI will receive shares equal to a fixed 25.6% of the combined group and an additional $1,218m of consideration to be paid in a mix of cash and shares, CF and OCI said.

Tony Will, President and Chief Executive Officer, CF said that this is an opportunity for the shareholders of both companies, with mid- to high-teens cash flow accretion.

“This is also a great outcome for US farmers as we have another supply point that will ensure our critical products are delivered reliably and in-time to meet our customers’ needs,” he said.

Nassef Sawiris, Chief Executive Officer, OCI said that combining OCI with CF builds upon the company’s platform in Europe and expansive distribution network in North America.

“As significant owners in the combined entity, our shareholders will benefit from the ongoing value creation of the business.

“The transaction will also provide OCI with the financial flexibility to fully unlock the potential of its ongoing businesses and pursue new investment opportunities in order to launch a new phase of value creation,” he said.

The companies expect to achieve approximately $500m in after-tax annual run-rate synergies from optimisation of operations, capital and corporate structure.

The new corporation will operate under the CF Industries name and be led by current CF management. The initial board of the new corporation will have 10 directors, consisting of eight of CF’s current directors.

The combined company will have its principal executive offices in Deerfield, Illinois and the transaction is expected to close in 2016.