Mosaic To Buy Florida Phosphate Business Of CF Industries In $1.4 Bln Deal

(RTTNews) - Fertilizer giant Mosaic Co. (MOS) agreed Monday to acquire the Florida phosphate business of peer CF Industries Holdings, Inc. (CF) for a total cash consideration of $1.4 billion. The companies also entered in two other strategic agreements for the long term supply of ammonia to Mosaic.

The total cash consideration includes about $200 million to fund CF's asset retirement obligation trust and escrow funds that CF Industries is transferring to Mosaic.

The Florida phosphate business is the phosphate mining and manufacturing business of Deerfield, Illinois-based CF Industries. The purchase of the business, which is approved by both companies' boards of directors, is expected to close in the first half of 2014. Mosaic said the deal is not expected to impact its shareholder distribution plans.

The deal will see Mosaic acquire the 22,000-acre South Pasture phosphate mine and the beneficiation plant in Hardee County, Florida, a phosphate manufacturing facility in Plant City, and ammonia terminal and finished product warehouse facilities in Tampa.

The facilities currently produce about 1.8 million tonnes of phosphate fertilizer per year, which would be additive to the annual 8.2 million tonnes currently produced by Mosaic.

"This is a set of agreements with significant strategic value to both CF Industries and Mosaic. The sale of our phosphate operations represents good value for our shareholders and the full set of transactions enables us to sharpen the strategic focus on our nitrogen business," CF Chairman and CEO Stephen Wilson said in a statement.

The deal is expected to add about $0.30 per share to Mosaic's 2015 earnings per share, excluding any debt financing costs and any changes to outstanding share count.

Mosaic noted that the existing infrastructure at South Pasture would result in a saving of about $500 million as it will not have to construct a $1 billion beneficiation plant. Mosaic would instead invest about $500 million to develop phosphate rock reserves and improve existing mines.

The two other strategic agreements include a long-term agreement for CF to supply Mosaic with between 600,000 and 800,000 tons of ammonia per year for up to 15 years from its Donaldsonville, Louisiana nitrogen complex beginning no later than January 2017.

"Uniting CF Industries' phosphate operations with Mosaic's creates an ideal combination that provides the opportunity for enhanced operating efficiencies and sustainability efforts, lower production costs and reduced capital investment—creating value for our shareholders, customers and employees," Mosaic President and CEO James Prokopanko stated.

Another agreement was inked for CF to provide 270,000 tonnes of ammonia annually for three years to Mosaic from its Point Lisas Nitrogen Ltd. joint venture beginning at the close of the phosphate sale. CF's 50 percent owned ammonia production facility is in the Republic of Trinidad and Tobago.

The two deals will enable Mosaic to forego its proposed ammonia manufacturing plant at its Faustina, Los Angeles phosphate facility, which will help it save about $1.1 billion in future capital expenditures.

However, Mosaic expects to spend an estimated $500 million to develop reserves and improve existing mines, and an estimated $200 million on marine assets to transport ammonia from Louisiana to its Florida facilities.

In Monday's regular trading session, MOS is currently trading at $46.85, up $0.92 or 1.98% on a volume of 84,717 shares, and CF is trading at $210.00, up $9.38 or 4.47% on a volume of 17, 017 shares.