April 16, 2014
Mosaic acquires ADM's Brazil and Paraguay fertiliser distribution business
The Mosaic Company signed definitive agreements to acquire Archer Daniels Midland Company's (ADM) fertiliser distribution business in Brazil and Paraguay for US$350 million.
The purchase price assumes the delivery of $150 million in working capital at closing.
"The addition of ADM's fertiliser distribution business in Brazil and Paraguay facilitates two critical strategic priorities for Mosaic. It enhances our global growth strategy and expands our market access," said Mosaic president and chief executive officer James T. Prokopanko.
"This acquisition provides a critical distribution platform in one of the world's fastest growing agricultural regions, and it complements our other recent strategic initiatives, including our joint venture in Saudi Arabia, our recent acquisition of CF Industries' phosphate business and our ongoing potash expansion program."
"Acquiring ADM's fertiliser distribution business accelerates our existing growth plans in Brazil and provides access to new customers throughout the country and in Paraguay," said Tobias Grasso, Mosaic's country manager in Brazil. "We will gain scale and operating efficiencies through this acquisition, as well as a talented group of employees who will join our team."
As part of the transaction, ADM will purchase fertiliser from Mosaic after the closing and will continue to supply certain fertiliser customers in Brazil and Paraguay. The parties have negotiated the terms of five-year fertiliser supply agreements providing for Mosaic to supply ADM's fertiliser needs in Brazil and Paraguay.
"The lengthy value chain inherent in the fertiliser business, along with strong competition from fully integrated companies that have entered the sector, has made it difficult for this business to consistently meet our return objectives. By selling our blending assets--while retaining our distribution business--we will be improving our returns while maintaining our important origination relationships with key growers in Brazil and Paraguay," says ADM CEO Patricia A. Woertz.
Mosaic will fund the acquisition with cash from operations. The transaction is not expected to impact Mosaic's shareholder distribution plans and will be contingent on customary regulatory approvals.
