January 19, 2011

Cargill to split off Mosaic unit

Cargill said on Tuesday that it planned to spin off its 64 percent stake in the Mosaic Company, a big producer of important ingredients in fertilizer and animal feed, leaving Mosaic open for a possible sale at a time when mining and agriculture giants are on the prowl for acquisitions. The complicated tax-free transaction worth more than US24 billion as estimated by The New York Times, will also help keep Cargill, one of the biggest American companies, private.

Cargill will distribute its 286 million Mosaic shares to its own shareholders and debt holders. The corporate parent’s sale of its 64 percent stake in Mosaic Company comes as big mining companies have been seeking to expand in fertilizer. As standards of living improve in countries like China and India, global demand for food is rising and companies that produce fertilizer are being seen as attractive takeover targets.

“The world is not getting less hungry,” James T. Prokopanko, Mosaic’s chief executive, said on Tuesday afternoon during a conference call with analysts. Mosaic was formed in 2004 from the merger of Cargill’s crop nutrition unit with IMC Global, creating a giant in fertilizer production and leaving Cargill with a 64 percent stake. It is the world’s second-largest potash producer, behind Potash, and owns more than a third of Canpotex, the Canadian entity that controls that country’s exports of the material. Based in Plymouth, Minn, it has 7,500 employees. Mosaic had a market value of about US$ 40 billion. Read more...

This blog is written by Martin Little The Global Miller, published and supported by the GFMT Magazine from Perendale Publishers.

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