Cargill Divests $24.3B Stake in Mosaic Company

It's a move that will enable Cargill to remain a private company while also freeing up cash for its family foundation-and one that has generated speculation that The Mosaic Company could be a good acquisition candidate.

Cargill, Inc., will spin-off its 64 percent, $24.3 billion stake in The Mosaic Company-a move that will free up cash for Cargill's family foundation while enabling it to remain a private company.

Specifically, Wayzata-based Cargill said Wednesday that it will swap 179 million Mosaic shares for Cargill stock held by Cargill investors, and the other 107 million Mosaic shares will be exchanged for Cargill debt held by third parties. Mosaic shares will then be sold in secondary offerings-and the company will become fully independent for the first time.

The announcement has generated a great deal of buzz on Wall Street with analysts predicting that Plymouth-based Mosaic could become a takeover target following Cargill's divestiture.

Cargill Chairman and CEO Greg Page said in a statement that “the transaction will accomplish a number of important business objectives for both Cargill and Mosaic and is in the best interests of both companies.”

According to Cargill, the transaction will enable it to meet “the diversification and distribution needs” of the charitable trusts and foundation formed through the estate planning of Margaret A. Cargill, one of Cargill's largest shareholders, who died in 2006.

For Mosaic, the deal will improve its financial flexibility and increase the liquidity of its stock. Shares of Mosaic stock closed down 10.5 percent at $76.15 on Wednesday. The $24.3 billion value of Cargill's stake in Mosaic is based on Tuesday's closing share price of $85.07 and the number of Cargill's Mosaic shares-of which there are 286.

“This transaction will bring significant benefits to our company and shareholders,” Mosaic President and CEO Jim Prokopanko said in a statement. “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.”

The deal is expected to close in the second quarter of 2011. It is subject to the approval of specific shareholders.

Cargill is Minnesota's largest company based on revenue, which totaled $107.9 billion in fiscal 2010. Mosaic Company is Minnesota's 12th-largest public company based on revenue for the fiscal year that ended in April, which totaled $6.8 billion.