Yahoo Finance Fertilizer Producer Mosaic Jumps on $1.5 Billion Saudi Deal
(Bloomberg) -- Mosaic Co., one of the world’s biggest phosphate producers, rose after agreeing to sell its stake in a Saudi joint venture for roughly $1.5 billion in a streamlining move aimed at boosting transparency on asset values.
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Mosaic agreed it will cede its 25% stake in phosphate maker MWSPC to partner Saudi Arabian Mining Company, or Ma’aden, the US company said in a filing Tuesday. In return, Mosaic will receive more than 111 million Ma’aden shares that it must hold for at least three years.
Shares of the Mosaic gained as much as 2.4% in New York, which compared with a 1.5% decline for the broader S&P 500 Materials subindex of peers.
The transaction comes at a time when fertilizer producers are coping with shrinking profitability as prices for crop-nutrient ingredients have fallen significantly from highs seen in the wake of Russia’s 2022 invasion of Ukraine. The deal follows Nutrien Ltd.’s announcement of plans to sell retail operations in Argentina, Chile and Uruguay in an effort to boost investor returns.
“This deal will streamline Mosaic’s operations with an enhanced focus on business and operations in North America,” Bloomberg Intelligence analyst Alexis Maxwell said in an interview. “Companies are being more cautious with their cash uses, and they are really focusing on the premier US corn-belt market.”
The current valuation of Ma’aden shares is a “very compelling consideration,” Joel Jackson, an analyst at BMO Capital Markets, wrote in a note to clients.
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