Mosaic To Buy CF Industries' Phosphate Business In $1.4 Bln Deal - Quick Facts

(RTTNews) - Mosaic Co. (MOS) announced Monday that it agreed to acquire the phosphate business of CF Industries Inc. (CF) for $1.2 billion in cash plus $200 million to fund CF Industries' asset retirement obligation escrow.

As per the terms of the agreement, Mosaic would acquire the 22,000-acre South Pasture phosphate mine and beneficiation plant in Hardee County, Fla., a phosphate manufacturing facility in Plant City, Fla., and ammonia terminal and finished product warehouse facilities in Tampa.

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

Mosaic expects that the acquisition will add about $0.30 per share to its 2015 earnings per share, excluding any debt financing costs and any changes to outstanding share count.

Mosaic and CF Industries also said that they signed strategic supply agreements under which CF Industries will provide Mosaic with up to approximately 1.0 million tonnes per year of ammonia. Under one agreement, Mosaic will purchase up to 725,000 tonnes annually for 15 years with pricing based on a formula tied to the prevailing price of U.S. natural gas. This agreement is expected to commence prior to January 2017.

Under a second agreement, Mosaic will purchase about 270,000 tonnes annually for three years from CF Industries' Trinidad operations at CFR Tampa market-based pricing. In light of these supply arrangements, Mosaic has decided to forego its proposed ammonia manufacturing plant at its Faustina, La. phosphate facility, saving about $1.1 billion in future capital expenditures.

In addition to the $1.4 billion total consideration in connection with the acquisition of CF Industries' phosphate business, Mosaic said it 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.

The estimated $2.1 billion of investments and capital expenditures is expected to be offset by an estimated $2.1 billion in capital savings related to the cancellations of the Faustina ammonia project and the planned Ona beneficiation facility. Mosaic also expects to capture significant additional operating efficiencies.

Under terms of the agreement, as part of the $1.4 billion total consideration, Mosaic would replace CF Industries' $200 million of escrowed financial assurance earmarked for closure and long-term care of phosphogypsum stacks under CF Industries' operation in Florida.

The transaction is expected to close in the first half of calendar 2014 and is not expected to impact Mosaic's shareholder distribution plans.