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Mosaic Company to acquire Vale Fertilizantes for $2.5 billion

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Staff Writer | December 19, 2016
The Mosaic Company has agreed to acquire from Vale its Vale Fertilizantes business for an aggregate purchase price valued at $2.5 billion.
Mosaic Company
Acquisition   Vale will have the potential $260 million
Vale will have the potential to earn an additional amount of up to $260 million to be paid in cash 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, one of the world's preeminent agricultural markets.

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.

The shares of Mosaic common stock to be issued to Vale at closing are expected to represent approximately 11 percent of Mosaic's outstanding shares.

The acquisition is expected to be accretive to Mosaic's earnings per share in 2018, generate over $80 million of after-tax synergies and provide substantial leverage to improvements in the crop nutrient business cycle.

The business to be acquired currently has 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 also will acquire Vale's 40 percent 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.