Mosaic buys fertiliser business of Brazil's Vale for $2.5 billion

The Mosaic Company has agreed to acquire from Vale SA’s 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 fertiliser production and distribution company in Brazil, one of the world's preeminent agricultural markets.

“This acquisition provides Mosaic a tremendous opportunity to capitalise on the fast-growing Brazilian agricultural market and from improving business conditions. 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," said Joc O'Rourke, president and CEO, Mosaic.

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 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 fertiliser 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 Cubatao-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. 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,” said Rich Mack, executive vice president and chief financial officer.