) has completed its earlier announced takeover of
) phosphate business for $1.4 billion. The fertilizer maker
secured the green light from the United States Department of
Justice (DOJ) for the acquisition in Jan 2014.
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Mosaic, in Oct 2013, cut a definitive deal to buy the phosphate
mining and manufacturing business of CF Industries for $1.2
billion in cash and $200 million to fund CF Industries' asset
retirement obligation escrow.
Under the deal, CF Industries has disposed 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. The
facilities acquired by Mosaic currently produce roughly 1.8
million tons of phosphate fertilizer per year.
Mosaic and CF Industries also entered into a long-term ammonia
supply agreement, under which, the latter will supply ammonia to
Mosaic from its Donaldsonville, La., nitrogen complex. CF
Industries will also supply ammonia to Mosaic from its 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
The buyout expands Mosaic's phosphate business and production
capacity of the nutrient in Florida. It also complements the
company's plans to mine phosphate rock reserves in Hardee and
Desoto counties and expansions of the existing Wingate mine.
The acquisition will bring Mosaic's annual phosphates capacity to
more than 11 million tons. It is also expected to add roughly 30
cents per share to Mosaic's earnings per share in 2015 and
provide meaningful operational synergies.
Mosaic financed the purchase with cash, a part of which it plans
to replace with pre-payable intermediate term debt financing. The
company plans to repay this debt financing as it generates excess
free cash flows.
Mosaic, which is one of the leading fertilizer makers along with
), is well placed to leverage the rising global demand for grain
Mosaic is a Zacks Rank #3 (Hold) stock.