Upcoming AWS Coverage on Israel Chemicals Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 20, 2016 / Active Wall St. blog coverage looks at the headline from The Mosaic Co. (NYSE: MOS) as the Company announced on December 19th, 2016, that it has agreed to acquire Vale Fertilizantes business from Vale S.A. (NYSE: VALE) for an aggregate purchase price valued at $2.5 billion. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
One of Mosaic's competitors within the Agricultural Chemicals space, Israel Chemicals Ltd (NYSE: ICL), reported on November 23, 2016, its financial results for the third quarter ended September 30, 2016. AWS will be initiating a research report on Israel Chemicals in the coming days.
Today, AWS is promoting its blog coverage on MOS touching on ICL. Get all of our free blog coverage and more by clicking on the links below:
http://www.activewallst.com/registration-3/?symbol=MOS
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Acquisition Details
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, valued at approximately $1.25 billion. The shares of Mosaic's common stock to be issued to Vale at closing are expected to represent approximately 11% of the former Company's outstanding shares.
Mosaic will pay Vale an additional amount of up to $260 million over the two-year period following closing if certain financial metrics are achieved. Upon closing the acquisition, Mosaic expects to become the leading fertilizer production and distribution Company in Brazil.
"This acquisition provides Mosaic a tremendous opportunity to capitalize on the fast-growing Brazilian agricultural market and from improving business conditions," said President and CEO Joc O'Rourke, "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."
Why Mosaic is Acquiring?
Mosaic expects this transaction to be both accretive to earnings and cash flow positive. Mosaic anticipates that the acquisition would be accretive to its earnings per share in 2018 and would generate over $80 million of after-tax synergies. The acquisition will add approximately 8,000 employees, bringing Mosaic's global headcount to approximately 17,000.
The business to be acquired currently has the 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 fertilizer production facilities as well as one potash facility in Brazil.
Through the acquisition, Mosaic will also acquire Vale's 40% 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 Cubatão-based nitrogen and non-integrated phosphate business, which is required to be carved out of Vale Fertilizantes prior to closing.
Mosaic's combined fertilizer business in Brazil will be led by Rick McLellan, currently the Company's Senior Vice President of Commercial. Mr. McLellan led the fertilizer business in Brazil when Mosaic was formed in 2004.
Vale on Board of Mosaic
Following the completion of the transaction, Vale will get the right to name two members, one of whom must be independent, for nomination to Mosaic's Board of Directors as long as it continues to meet certain ownership thresholds. Mosaic announced that subject to limited exceptions, the Company's shares to be issued to Vale may not be transferred for two years following the closing.
The transaction is subject to receipt of regulatory approvals and satisfaction of closing conditions, including the completion of the carve-out of the Cubatão-based production facilities from Vale Fertilizantes, and is expected to close in late 2017.
Stock Performance
On Monday, following the announcement, the stock closed the trading session at $27.77, tumbling 6.06% from its previous closing price of $29.56. A total volume of 9.52 million shares have exchanged hands, which was higher than the 3-month average volume of 5.12 million shares. Mosaic's stock price advanced 2.64% in the last month, 11.81% in the past three months, and 4.99% in the previous six months. Furthermore, since the start of the year, shares of the company have gained 4.82%. The stock is trading at a PE ratio of 22.27 and has a dividend yield of 3.96%.
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