The Mosaic Co., Plymouth, Minn., said Jan. 8 that it has completed the previously announced acquisition of Vale Fertilizantes from Vale SA, Rio de Janeiro. Per the recently modified terms, Vale will receive $1.15 billion and 34.2 million shares of Mosaic common stock, or 8.9 percent of Mosaic shares (GM Jan. 5, p. 1; Dec. 23, 2016).
As a result of Vale’s new stake in Mosaic, Luciano Siani Pires has been elected to Mosaic’s board of directors. He has been Vale’s CFO since 2012, with additional responsibilities in procurement and information technology. He has held positions in strategic planning, human resources, and governance at Vale, and also worked at McKinsey & Co. and the Brazilian Development Bank. A native of Brazil, he holds an MBA in Finance from the Stern School of Business at New York University.
Vale said the partnership with Mosaic enhances Vale’s exposure to the worldwide fertilizers market, particularly in the large and fast-growing agricultural regions of North America and Brazil. In addition, the proceeds will be used to strengthen Vale’s balance sheet and reduce its indebtedness as part of Vale’s strategy to generate shareholder value.
Mosaic recently announced that the deal should result in $275 million of annualized improved cash flow by the end of 2020 (GM Nov. 3, 2017), replacing a previously announced target of $75 million in annual operating synergies.
The Vale business to be acquired currently has capacity to produce 4.8 million mt of finished phosphate crop nutrients and 500,000 mt of potash. It includes five Brazilian phosphate rock mines and four chemical and fertilizer 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, taking Mosaic’s own stake in that asset to 75 percent. The purchase also includes Vale’s junior potash mining project at Kronau, Sask., Canada.
Mosaic was already one of the largest producers and distributors of blended fertilizer for agricultural use in Brazil, owning and operating 12 blending plants in Brazil and one in Paraguay. In addition, it leases several other warehouses and blending units, depending on sales and production levels. It has a 62 percent ownership interest in Fospar SA, which owns and operates an SSP granulation plant and a deep-water fertilizer port and throughput warehouse terminal facility in Paranagua, Brazil. The port facility at Paranagua handles approximately 2.6 million mt of imported fertilizer.
Mosaic has integrated its 2014 acquisition of ADM’s fertilizer distribution business in Brazil and Paraguay (GM April 21, 2014). Also inked with ADM in 2014 were five-year fertilizer supply agreements to meet ADM’s fertilizer needs in Brazil and Paraguay.
In announcing the news, Mosaic said it expects to release fourth-quarter and full-year 2017 earnings results at approximately 5:00 p.m. Eastern Standard Time on Feb. 19, after market close of the New York Stock Exchange. At the same time, Mosaic intends to provide preliminary historical pro forma financial information for seven quarters ending Sept. 30, 2017, reflecting post-acquisition segmentation, which will be effective beginning the first quarter of 2018. The pro forma information will also include the impacts of the acquisition on certain segments.