Mosaic Company to acquire CF Industries' phosphate business for $ 1.2 billion

The Mosaic Company, one of the world's leading producers of concentrated phosphate and potash crop nutrients, announced on October 28, 2013, that it has signed a definitive agreement to acquire the phosphate business of CF Industries Inc for $ 1.2 billion in cash plus $200 million to fund CF Industries' asset retirement obligation escrow. Under the terms of the agreement, Mosaic would acquire the 22,000-acre South Pasture phosphate mine and beneficiation plant in Hardee County, Fla., a phosphate manufacturing facility in Plant City, Fla., and ammonia terminal and finished product warehouse facilities in Tampa. The CF Industries' facilities currently produce approximately 1.8 million tonnes of phosphate fertiliser per year, which would be additive to the annual 8.2 million tonnes currently produced by Mosaic.
 
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The proximity of CF Industries' South Pasture mine to Mosaic's planned Ona phosphate mine in Hardee County would allow Mosaic to take advantage of the synergies associated with the combined mining assets. The existing infrastructure at South Pasture would result in Mosaic saving approximately $ 500 million by not having to construct a $ 1 billion beneficiation plant. Mosaic would instead invest approximately $ 500 million to develop phosphate rock reserves and improve existing mines.
 
Mosaic and CF Industries also signed strategic supply agreements under which CF Industries will provide Mosaic with up to approximately one million tonnes per year of ammonia. Under one agreement, Mosaic will purchase up to 7,25,000 tonnes annually for 15 years with pricing based on a formula tied to the prevailing price of US natural gas. This agreement is expected to commence prior to January 2017.  Under a second agreement, Mosaic will purchase approximately 2,70,000 tonnes annually for three years from CF Industries' Trinidad operations at CFR Tampa market-based pricing. In light of these supply arrangements, Mosaic has decided to forego its proposed ammonia manufacturing plant at its Faustina, La. phosphate facility, saving approximately $1.1 billion in future capital expenditures.