Mosaic Climbs Amid Reported Interest From Brazil's Vale
17 July 2009 - 1:08AM
Dow Jones News
Shares of Mosaic Co. (MOS) opened nearly 10% higher on Thursday
after a Brazilian news agency reported that mining group Vale SA
(VALE) is considering a bid for the fertilizer producer.
According to Estado, Vale is considering a bid valued at about
$25 billion.
Vale and Mosaic declined comment when contacted by Dow Jones
Newswires.
The fertilizer sector has been ripe with takeover activity in
recent months following a precipitous plunge in valuations from the
peak reached at the height of the commodities boom last year.
Roger Agnelli, Vale's chief executive, has said the company
aimed to develop its potassium-mining business to serve Brazil's
fast-growing agricultural sector.
The company paid around $850 million earlier this year for
potassium mining assets in Argentina and Canada. Brazil's reliance
on fertilizer imports could also provide synergies for Vale, which
controls key transport infrastructure linking the country's
agricultural heartland to ports.
The market value of Mosaic, which was floated as a joint venture
pooling assets from Cargill Inc. and IMC Global Inc. (IGL), have
more halved from a peak above $70 billion over the past year.
Mosaic shares were recently up 9.8% at $48.98, valuing the
company at aorund $19.2 billion.
The company derives almost 60% of revenue and more than half of
its earnings from phosphate-based products, the hardest-hit sector
of a market suffering from weakening demand and stocks of
high-priced inventory.
In April, the company reported an 88% drop in fiscal
third-quarter profits.
The drop in Mosaic earnings had raised speculation that Cargill
may seek to buy out its partner and minorities. the company
declined comment on the matter Thursday.
The reported bid interest comes amid a three-way tussle between
North American fertilizer producers. CF Industries Holdings Inc.
(CF) is fending off a hostile bid from Canada's Agrium Inc. (AGU),
while pursuing its own unsolicited offer for Terra Industries Inc.
(TRA).
-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086;
john.kolodziejski@dowjones.com
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com