Mosaic Buys Out Their Competition In the Fertilizer Business for $1.2 Billion

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Mosaic, one of the world’s largest fertilizer companies, has just saved itself some money by purchasing the phosphate business of their rival, CF Industries, for $1.2 billion. While the sale is steep, it in fact allows Mosaic to scrap their plans to build a new ammonia manufacturing plant in Faustina, Louisiana, and a $1 billion phosphate processing plant at Ona, Florida. The $2.1 they save will offset the $2.1 they will spend in the complete CF deal and other related investments.

“Uniting CF Industry’s 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,” said Mosaic CEO James Prokanko, as reported by Fox News.

  

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CF finds the decision strategic as well, saying “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,” as CEO Wilson said.

Phosphate is one of three of the most important crop nutrients used in farming. Mosaic, in expanding their Florida standing, will add to their annual 8.2 tons of produced phosphate with the acquisition of the new company, with about 1.8 tons extra.

“This is a perfect strategic fit for us,” said Mosaic CFO Larry Stranghoener. He said they can now keep pace with the demand for phosphate fertilizers in North American and South America. Concerns that this might give them an unfair hold on the market, and cue the U.S. Department of Justice to review their competition concerns did not worry Stranghoener:

“It’s a product that is freely traded and frequently traded across borders, and so regional market share data should not matter.”

In handling the transactions to make the deal happen, Mosaic was advised by Dorsey & Whitney, while CF Industries was advised by Rothschild.