The Mosaic Company, one of the world's leading providers of crop nutrients and feed ingredients for the global agriculture industry, and Cargill, a privately held international producer and marketer of food, agriculture, financial and industrial products and services, on January 19 jointly announced a transaction that would result in the distribution of Cargill's 64 percent stake, or 286 million share position, in Mosaic to Cargill's shareholders and debt holders.
The transaction will enable Cargill to accomplish several important objectives, including maintaining its status as a private company while meeting the diversification and distribution needs of the charitable trusts and foundation (collectively the "Charitable Trusts") formed through the estate planning of Margaret A. Cargill, one of Cargill's largest shareholders, who died in 2006. The transaction also will enhance Cargill's credit profile and ensure that the company's financial results, compensation plans and management focus are fully aligned with the performance of the businesses Cargill directly manages.
The transaction is expected to benefit Mosaic by improving its long-term strategic and financial flexibility, as well as greatly increasing the liquidity of Mosaic's common stock. As a result of the transaction, there will be no change to Mosaic's total outstanding shares, the economic rights of the Mosaic shares or earnings per share. The transaction also is not expected to have any impact on Mosaic's underlying financial performance or current business operations.
In carrying out the transaction, Cargill plans to exchange approximately 179 million of its 286 million Mosaic shares with Cargill shareholders, including the Charitable Trusts, for all or a portion of their Cargill stock. Cargill expects to exchange all of its remaining 107 million Mosaic shares for Cargill debt owned by third parties. Pursuant to a ruling from the U.S. Internal Revenue Service, the transaction is expected to be tax free to Cargill, Mosaic and their respective shareholders. Mosaic, Cargill and the Charitable Trusts have entered into a series of agreements to effect the transaction, including terms intended to provide for an orderly disposition of the Mosaic shares. The transaction is expected to close in the second calendar quarter of 2011.
Jim Prokopanko, Mosaic's president and chief executive officer, said, "This transaction will bring significant benefits to our company and shareholders. Going forward, we will be better positioned to capitalize on the positive outlook for our industry, retain our market leading positions and reinforce our existing competitive advantages. Importantly, there will be no adverse impact to our earnings potential, strong balance sheet or ability to generate cash."
Greg Page, Cargill's chairman and chief executive officer, said, "The transaction will accomplish a number of important business objectives for both Cargill and Mosaic and is in the best interests of both companies. Mosaic has been a landmark investment for Cargill. We are proud of what Mosaic and its employees have accomplished and remain confident in the company and its future. We look forward to continuing our commercial relationship with Mosaic, which strengthens Cargill's ability to deliver high-value solutions to our farm customers around the world."
Mosaic's board of directors formed a Special Committee consisting solely of independent directors to evaluate and negotiate the transaction. Upon the Special Committee's recommendation, Mosaic's board of directors has approved the transaction. The transaction is subject to approval by holders of a majority of Mosaic's shares held by non-Cargill shareholders. Cargill's board of directors also has approved the transaction. Cargill retains the right to terminate the transaction subject to payment of a termination fee to Mosaic's minority shareholders under certain circumstances.
About The Mosaic Company
The Mosaic Company is one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients. Mosaic is a single source provider of phosphates and potash fertilizers and feed ingredients for the global agriculture industry. Mosaic was created in 2004 through the combination of Cargill's fertilizer business with IMC Global, whereby Cargill received its 64 percent stake in Mosaic.
Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services. Founded in 1865, the privately held company employs 131,000 people in 66 countries. Cargill helps customers succeed through collaboration and innovation, and is committed to applying its global knowledge and experience to help meet economic, environmental and social challenges wherever it does business.