Cargill to divest 64% stake in Mosaic

by Eric Schroeder
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MINNEAPOLIS — Cargill on Tuesday said it will divest its 64% stake in The Mosaic Co., Plymouth, Minn., to Cargill’s shareholders and debt holders. According to Cargill, the move would allow the company to remain public while also enhancing its credit profile. The split-off also would benefit Mosaic in that it would improve the company’s long-term strategic and financial flexibility, as well as greatly increase the liquidity of Mosaic’s common stock, Cargill said.

As part of the transaction, Cargill plans to exchange approximately 179 million of its 286 million Mosaic shares with Cargill shareholders, including the Charitable Trusts, for all or a portion of their Cargill stock. The remaining 107 million Mosaic shares would be exchanged for Cargill debt owned by third parties. In total, Cargill’s stake in Mosaic is valued at approximately $24.3 billion.

“This transaction will accomplish a number of important business objectives for both Cargill and Mosaic and is in the best interests of both companies,” said Greg Page, chairman and chief executive officer of Cargill. “Mosaic has been a landmark investment for Cargill. We are proud of what Mosaic and its employees have accomplished and remain confident in the company and its future. We look forward to continuing our commercial relationship with Mosaic, which strengthens Cargill’s ability to deliver high-value solutions to our farm customers around the world.”

The transaction, which must be approved by holders of a majority of Mosaic’s shares that aren’t held by Cargill shareholders, is expected to close in the second quarter of 2011.

Mosaic is North America’s second-largest fertilizer producer and owns phosphate production in Florida, Louisiana, Brazil and Argentina as well as ports and warehouses in Asia, South America, and North America. The company also owns production capacity of 10.4 million tons of potash with mines in Saskatchewan, New Mexico and Michigan.

Shares in Mosaic on the New York Stock Exchange closed Jan. 18 at $85.07, but fell $1.44, or 1.7%, to $83.63 in after-market trading. In early morning trading on Jan. 19, the company’s stock was at $79.51, down nearly 7% from the previous day’s close.

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