Fertilizer maker Yara made a major acquisition in Latin America, one of the world's fastest-growing agricultural markets, as it seeks to increase production capacity by about one third.

But the world's biggest nitrogen-based fertilizer maker dropped its goal to achieve this expansion by 2016, a move analysts said reflected its cautious approach to deals and a recent supply glut, partly caused by Chinese government subsidies.

Yara on Tuesday bought production, blending and distribution assets from Omimex Resources Inc for $425 million, including debt, and said it was looking for more acquisitions, particularly production assets in Brazil.

Last year, the company made around one fifth of its revenue in South and Central America.

Yara had said it aimed to expand its production capacity by 8 million tonnes from 24.5 million in 2010, by 2016.

The Omimex deal would put Yara nearly half way to achieving that goal. But the company said on Tuesday it no longer wanted to put a time frame on acquisitions, which should be made in the best market conditions.

A glut of fertilizer on the global market in the last few years, due partly to Chinese production, has depressed asset prices and some analysts think they may fall further.

"We will look at acquiring or building phosphate capacity, and potentially acquire nitrate, nitrogen, capacity in Brazil," Chief Financial Office Torgeir Kvidal said.

"We don't have a specific timeline for upstream acquisitions but we will look at them continuously."

The Omimex deal gives Yara a half a million tonnes of production capacity, $20 million in annual synergies, a portfolio similar to its existing assets and a good match with a Brazilian acquisitions earlier this year, he said.

"It really creates a fantastic foothold for growth in this part of Latin America, which is a key cash crop region," Kvidal said.

At 1150 GMT, Yara shares were down 2.3 percent, underperforming a slightly lower Oslo market.

Earnings Scenarios 

Yara is also moving ahead with plans to build an ammonia plant on the U.S. Gulf of Mexico coast with Germany's BASF and an ammonia nitrate plant in Australia with Orica , it said in a presentation to investors.

Tuesday's acquisition will give the firm production and distribution assets in Colombia, Peru, Mexico, Panama, Costa Rica, and Bolivia.

"We regard the transaction as very positive. It will strengthen Yara's downstream activities in a market experiencing significant growth," analysts at Swedbank said in a note to clients.

UBS said the deal would increase earnings per share (EPS) by 25 cents.

Yara said new earnings scenarios, based on various market conditions, indicated a spread of earnings per share in a range of 19-54 crowns depending on whether the market was supply or demand driven.

In the scenarios presented last year, the range was 20-57 crowns per share.

Analysts, on average, expect 2013 EPS of 26.6 crowns, according to a poll.

Yara maintained its target of returning 40 to 45 percent of its net income to shareholders, including a minimum 30 percent in the form of dividends.