CF Industries Inc.
) rose around 5% during the trading session following the news
that it has signed a definitive agreement to sell its phosphate
mining and manufacturing business to fertilizer producer
The Mosaic Company
) for $1.4 billion in cash (including $200 million to fund CF
Industries' asset retirement obligation escrow).
CF Industries has agreed to dispose the Hardee County phosphate
rock mine, the Plant City phosphate complex, an ammonia terminal,
phosphate warehouse and dock at the Port of Tampa and the site of
the former Bartow phosphate complex to Mosaic.
Under the deal, Mosaic will be shouldering responsibilities
related to the closer of the agreement and long-term maintenance
and monitoring of the phosphogypsum stacks at the Plant City and
Bartow complexes. The facilities to be acquired by Mosaic
currently produce roughly 1.8 million tons of phosphate
fertilizer per year
The deal is also subjected to a long-term ammonia supply
agreement, under which, CF Industries will supply ammonia to
Mosaic from its Donaldsonville, La., nitrogen complex, and
another agreement to supply ammonia to Mosaic from CF Industries'
50% owned Point Lisas Nitrogen Ltd. (PLNL) facility in the
Republic of Trinidad and Tobago.
Under the Donaldsonville Ammonia Agreement, CF Industries will
supply between 600,000 and 800,000 tons of ammonia per year for
up to 15 years, which is expected to begin by 2017. The ammonia
to be supplied will be used for phosphate production and its
price will depend on the cost of natural gas delivered to
Donaldsonville. The agreement is however not conditional on the
phosphate sale transaction.
The Trinidad ammonia agreement is conditional on the phosphate
sale transaction and will be effective after the closure of the
deal. Pricing of ammonia, under the deal, will be in sync to the
existing agreement under which CF Industries purchases ammonia
Both companies' Board of Directors has approved the
transaction. The deal is subject to customary closing conditions
and necessary regulatory approvals including the expiration or
termination of the waiting period under the Hart-Scott-Rodino Act
and certain environmental related approvals for the phosphate
business. The deal is expected to complete by 2014.
CF Industries, headquartered in Deerfield, IL, is one of the
largest manufacturers and distributors of nitrogenous and
phosphatic fertilizer products in the world. The company's
principal products in the nitrogenous fertilizer business are
ammonia, granular urea, urea ammonium nitrate solution (UAN) and
ammonium nitrate (AN).
CF Industries currently retains a Zacks Rank #3 (Hold) and is
scheduled to release its third-quarter 2013 results on Nov 4.
Other companies in the fertilizer industry worth considering
China Bluechip ADR
The Scotts Miracle-Gro Co.
). Both hold a Zacks Rank #1 (Strong Buy).
CHINA BLUECHEM (CBLUY): Get Free Report
CF INDUS HLDGS (CF): Free Stock Analysis
MOSAIC CO/THE (MOS): Free Stock Analysis
SCOTTS MIRCL-GR (SMG): Free Stock Analysis
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