Mosaic has agreed to acquire the fertilizer business of mining company Vale (Rio de Janeiro, Brazil) for an aggregate purchase price valued at $2.5 billion, Mosaic has announced.
Vale’s board approved the sale of the fertilizer assets earlier this year. Vale will have the potential to earn an additional amount of up to $260 million to be paid in cash over a two-year period following closing of the deal, if certain financial metrics are achieved. The transaction is subject to receipt of regulatory approvals and satisfaction of closing conditions, including the completion of the carve-out of the Cubatão, Brazil, production facilities from the Vale Fertilizantes subsidiary, and is expected to close in late 2017, Mosaic says.
“This acquisition provides Mosaic a tremendous opportunity to capitalize on the fast-growing Brazilian agricultural market and from improving business conditions,” says Joc O’Rourke, president and CEO of Mosaic. “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.”
The business to be acquired has the capacity to produce 4.8 million tons of finished phosphate crop nutrients and 500,000 metric tons of potash annually. It includes five phosphate rock mines and four chemical and fertilizer production facilities, as well as one potash facility, in Brazil. Through the deal, Mosaic also will acquire Vale’s 40% interest in the Miski Mayo phosphate mine in Peru, and a 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. Including the Rio Colorado potash project in the deal is subject to Mosaic’s agreement following appropriate diligence. The transaction excludes Vale’s Cubatão nitrogen and non-integrated phosphate business, which must be carved out of Vale Fertilizantes prior to closing.
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, Mosaic says. The shares of Mosaic common stock to be issued to Vale at closing are expected to represent approximately 11% of Mosaic’s outstanding shares. The acquisition is expected to be accretive to Mosaic’s earnings per share in 2018, generate more than $80 million of after-tax cost synergies, and provide leverage to improvements in the crop nutrient business cycle, Mosaic says. 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 as long as the company continues to meet certain ownership thresholds.
“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,” says Rich Mack, executive vice president and CFO of Mosaic.
Approximately 8,000 employees will transfer to Mosaic, raising the company’s worldwide headcount to approximately 17,000. Mosaic expects that its phosphate production facilities in the United States will continue to operate at high rates to meet strong and growing worldwide demand.
J.P. Morgan Securities and UBS Investment Bank served as financial advisors to Mosaic, and Simpson Thacher & Bartlett and Lobo & de Rizzo Advogados acted as Mosaic’s legal counsel.
By Francinia Protti-Alvarez
Source: Chemical Week
France has launched an offshore green hydrogen production platform at the country’s Port of Saint-Nazaire this week, along with its first offshore wind farm. The hydrogen plant, which its operators say is the world’s first facility of its type, coincides with the launch of another “first of its kind” facility in Sweden dedicated to storing hydrogen in an underground lined rock cavern (LRC).
The project sets up the Hydrogen Valley in Rome, the first industrial-scale technological hub for the development of the national supply chain for the production, transport, storage and use of hydrogen for the decarbonization of industrial processes and for sustainable mobility.
At first glance, hydrogen seems to be the perfect solution to our energy needs. It doesn’t produce any carbon dioxide when used. It can store energy for long periods of time. It doesn’t leave behind hazardous waste materials, like nuclear does. And it doesn’t require large swathes of land to be flooded, like hydroelectricity. Seems too good to be true. So…what’s the catch?