PLYMOUTH, Minn., Dec. 19, 2016 /PRNewswire/ -- The Mosaic
Company (NYSE: MOS) today announced it has agreed to acquire from
Vale S.A. its Vale Fertilizantes business for an aggregate purchase
price valued at $2.5 billion.
Vale will have the potential to earn an additional amount of up to
$260 million to be paid in cash over
the two-year period following closing if certain financial metrics
are achieved. Upon closing the acquisition, Mosaic expects to
become the leading fertilizer production and distribution company
in Brazil, one of the world's
preeminent agricultural markets.
"This acquisition provides Mosaic a tremendous opportunity to
capitalize on the fast-growing Brazilian agricultural market and
from improving business conditions," said President and CEO
Joc O'Rourke. "We see this as an
ideal strategic fit for Mosaic. We have proven expertise in
phosphate mining and manufacturing, a strong record of successful
acquisition integration, and extensive relationships and experience
in Brazil."
Mosaic intends to fund the acquisition with $1.25 billion in cash, which the company plans to
raise through the issuance of debt, and approximately 42.3 million
shares of its common stock. The shares of Mosaic common stock to be
issued to Vale at closing are expected to represent approximately
11 percent of Mosaic's outstanding shares.
The acquisition is expected to be accretive to Mosaic's earnings
per share in 2018, generate over $80
million of after-tax synergies and provide substantial
leverage to improvements in the crop nutrient business cycle.
The business to be acquired currently has capacity to produce
4.8 million tonnes of finished phosphate crop nutrients and 500,000
tonnes of potash. It includes five Brazilian phosphate rock mines
and four chemical and fertilizer production facilities, as well as
one potash facility in Brazil.
Through the acquisition, Mosaic also will acquire Vale's 40 percent
economic interest in the Miski Mayo phosphate mine in Peru, and its potash project at Kronau, Saskatchewan, Canada. Mosaic has the
option to include the Rio Colorado, Argentina potash project at closing as part of
the transaction. The inclusion of the Rio Colorado potash project
in the transaction is subject to Mosaic's agreement following
appropriate diligence. The transaction excludes Vale's
Cubatão-based nitrogen and non-integrated phosphate business, which
is required to be carved out of Vale Fertilizantes prior to
closing.
"Mosaic has agreed to acquire high-quality and complementary
assets in a powerhouse agricultural center that have significant
cost advantages at an attractive valuation," said Rich Mack, Executive Vice President and Chief
Financial Officer. "We expect this transaction to be both accretive
to earnings and cash flow positive, and we will continue our focus
on maintaining a solid investment grade credit rating.
"As commodity and crop nutrition markets improve, Mosaic will
have the ability to meaningfully outperform our competition and
generate shareholder value. Vale will be a valued minority
shareholder and partner who will bring significant Brazilian
expertise that we believe will benefit Mosaic in the years
ahead."
Mosaic's combined fertilizer business in Brazil will be led by Rick McLellan, currently Mosaic's Senior Vice
President, Commercial. Mr. McLellan led the fertilizer business in
Brazil when Mosaic was formed in
2004.
"I am excited at the prospect of leading Mosaic's vastly
expanding business in Brazil,"
said Mr. McLellan. "This will be an ideal time for us to grow in
the region, with the strong Brazilian farm economy and growers
across the country working to deliver higher crop yields."
Following the closing, Vale will have the right to designate up
to two individuals, one of whom must be independent, for
nomination to Mosaic's Board of Directors as long as it continues
to meet certain ownership thresholds. Subject to limited
exceptions, the Mosaic shares to be issued to Vale may not be
transferred for two years following the closing, after which time
Vale will have customary registration rights. In
connection with its minority interest, Vale has agreed to certain
stand-still and lockup obligations, and to certain voting
agreements.
The transaction is subject to receipt of regulatory approvals
and satisfaction of closing conditions, including the completion of
the carve-out of the Cubatão-based production facilities from Vale
Fertilizantes, and is expected to close in late 2017.
The acquisition will add approximately 8,000 employees, bringing
Mosaic's global headcount to approximately 17,000.
Mosaic expects that its U.S. phosphate production facilities
will continue to operate at high rates in order to meet strong and
growing global demand. The company's premium
MicroEssentials® products are also expected to continue
to be produced exclusively in the U.S., and Brazil is expected to remain a key market for
MicroEssentials.
J.P. Morgan Securities and UBS Investment Bank served as
financial advisors to Mosaic, and Simpson Thacher & Bartlett
LLP and Lobo & de Rizzo Advogados acted as legal counsel to
Mosaic.
The company will host a conference call to discuss the
acquisition at 8:00 a.m. Central Time
today, December 19, 2016. The call
will be accessible through a webcast at www.mosaicco.com/investors
or by calling 877-608-0554 (U.S.) or 678-825-8336 (international).
The conference ID is 41856495. Presentation slides to be used on
the call are also available on the website. Messrs. O'Rourke
and Mack will lead the discussion.
About The Mosaic Company
The Mosaic Company is one of
the world's leading producers and marketers of concentrated
phosphate and potash crop nutrients. Mosaic is a single-source
provider of phosphate and potash fertilizers and feed ingredients
for the global agriculture industry. More information on the
company is available at www.mosaicco.com.
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements include, but are not limited to, statements about
our proposed acquisition of the global phosphate and potash
operations of Vale S.A. ("Vale") conducted through Vale
Fertilizantes S.A. (the "Transaction") and the anticipated benefits
and synergies of the proposed Transaction, other proposed or
pending future transactions or strategic plans and other statements
about future financial and operating results. Such statements are
based upon the current beliefs and expectations of The Mosaic
Company's management and are subject to significant risks and
uncertainties. These risks and uncertainties include but are not
limited to risks and uncertainties arising from the possibility
that the closing of the proposed Transaction may be delayed or may
not occur, including delays or risks arising from any inability to
obtain governmental approvals of the Transaction on the proposed
terms and schedule, any inability of Vale to achieve certain other
specified regulatory and operational milestones or to successfully
complete the transfer of the Cubatão business to Vale and its
affiliates in a timely manner, and the ability to satisfy any of
the other closing conditions; our ability to secure financing, or
financing on satisfactory terms and in amounts sufficient to
fund the cash portion of the purchase price without the need for
additional funds from other liquidity sources; difficulties with
realization of the benefits of the proposed Transaction, including
the risks that the acquired business may not be integrated
successfully or that the anticipated synergies or cost or capital
expenditure savings from the Transaction may not be fully realized
or may take longer to realize than expected, including because of
political and economic instability in Brazil or changes in government policy in
Brazil; the predictability and
volatility of, and customer expectations about, agriculture,
fertilizer, raw material, energy and transportation markets that
are subject to competitive and other pressures and economic and
credit market conditions; the level of inventories in the
distribution channels for crop nutrients; the effect of future
product innovations or development of new technologies on demand
for our products; changes in foreign currency and exchange rates;
international trade risks and other risks associated with Mosaic's
international operations and those of joint ventures in which
Mosaic participates, including the risk that protests against
natural resource companies in Peru
extend to or impact the Miski Mayo mine, the ability of the Wa'ad
Al Shamal Phosphate Company (also known as MWSPC) to obtain
additional planned funding in acceptable amounts and upon
acceptable terms, the timely development and commencement of
operations of production facilities in the Kingdom of Saudi Arabia, the future success of
current plans for MWSPC and any future changes in those plans;
difficulties with realization of the benefits of our long term
natural gas based pricing ammonia supply agreement with CF
Industries, Inc., including the risk that the cost savings
initially anticipated from the agreement may not be fully realized
over its term or that the price of natural gas or ammonia during
the term are at levels at which the pricing is disadvantageous to
Mosaic; customer defaults; the effects of Mosaic's decisions to
exit business operations or locations; changes in government
policy; changes in environmental and other governmental regulation,
including expansion of the types and extent of water resources
regulated under federal law, carbon taxes or other greenhouse gas
regulation, implementation of numeric water quality standards for
the discharge of nutrients into Florida waterways or efforts to reduce the
flow of excess nutrients into the Mississippi River basin, the
Gulf of Mexico or elsewhere;
further developments in judicial or administrative proceedings, or
complaints that Mosaic's operations are adversely impacting nearby
farms, business operations or properties; difficulties or delays in
receiving, increased costs of or challenges to necessary
governmental permits or approvals or increased financial assurance
requirements; resolution of global tax audit activity; the
effectiveness of Mosaic's processes for managing its strategic
priorities; adverse weather conditions affecting operations in
Central Florida, the Mississippi
River basin, the Gulf Coast of the United
States or Canada, and
including potential hurricanes, excess heat, cold, snow, rainfall
or drought; actual costs of various items differing from
management's current estimates, including, among others, asset
retirement, environmental remediation, reclamation or other
environmental regulation, Canadian resources taxes and royalties,
or the costs of the MWSPC, its existing or future funding and
Mosaic's commitments in support of such funding; reduction of
Mosaic's available cash and liquidity, and increased leverage, due
to its use of cash and/or available debt capacity to fund financial
assurance requirements and strategic investments; brine inflows at
Mosaic's Esterhazy, Saskatchewan,
potash mine or other potash shaft mines; other accidents and
disruptions involving Mosaic's operations, including potential mine
fires, floods, explosions, seismic events, sinkholes or releases of
hazardous or volatile chemicals; and risks associated with cyber
security, including reputational loss, as well as other risks and
uncertainties reported from time to time in The Mosaic Company's
reports filed with the Securities and Exchange Commission. Actual
results may differ from those set forth in the forward-looking
statements.
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SOURCE The Mosaic Company