The Mosaic Company
) said that it has received the green light from the United
States Department of Justice (DOJ) for its earlier announced
CF Industries, Inc.
) phosphate business.
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Mosaic, in Oct 2013, landed a definitive deal to buy the
phosphate mining and manufacturing business of CF Industries for
$1.4 billion (including $200 million to fund CF Industries' asset
retirement obligation escrow). The closing of the transaction is
now subject to receipt of other regulatory clearances.
Under the deal, CF Industries 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. The
facilities to be acquired by Mosaic currently produce roughly 1.8
million tons of phosphate fertilizer per year.
The deal is also subject to a long-term ammonia supply agreement,
under which, CF Industries will supply ammonia to Mosaic from its
Donaldsonville, La., nitrogen complex. The company 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 acquisition is expected to add roughly 30 cents per share to
Mosaic's earnings per share in 2015. The buyout will expand the
company's phosphate business and production capacity of the
nutrient in Florida.
Mosaic had a lackluster third-quarter 2013, reported on Nov 5,
with profit tumbling 70% year over year to $124 million or 29
cents per share. The bottom line was hit by lower potash and
phosphate pricing, cautious buyer behavior and a late fall
application season in North America.
Revenues fell roughly 28% year over year to $1,908.7 million.
Double-digit declines across phosphate and potash franchises on
lower selling prices dragged down the top line. The company
witnessed lower sales volumes in both businesses in the quarter.
While Mosaic sees healthy demand in North America based on
excellent crop nutrient affordability, it expects a challenging
Mosaic, which currently holds a Zacks Rank #3 (Hold), will report
its fourth-quarter results on Feb 11.
Other fertilizer companies with favorable Zacks Rank are
Intrepid Potash, Inc.
). While China Bluechip carries a Zacks Rank #1 (Strong Buy),
Intrepid Potash holds a Zacks Rank #2 (Buy).