Mosaic Co (NYSE:MOS) which is the globes largest manufacturer of phosphate, has announced on Monday that it has acquired the phosphate operations of CF Industries for $1.4 billion. The company which was the biggest producer will get bigger with this buy.
In the buy announced on Monday, the company will now get a big mine that is located southeast of the Tampa Bay and is located close to its exiting mines. The acquisition will also comprise a processing plant, which means that Mosaic need not build a plant of its own and that in turn will save the company can $500 million.
“The closeness of the bought over mines and plant to our operations has a number of advantages and the buy will makes financial sense both in terms of expenditure and income earned” said the company’s Chief Financial Officer Larry Stranghoener in a conference call with stock researchers.
Mosaic is one of the world’s biggest fertilizer producers and it mines potash and phosphate and respectively converting them into nutrients for crops that have potassium and phosphorus. The company’s main potash plants are located in Saskatchewan; while its phosphate plants are located in south central Florida. Mosaic will spend cash worth
Mosaic will spend $1.2 billion in cash and another $200 million to fund CF’s retirement assets accounts. The buy is supposed to add about 30 cents a share in the company’s 2015 income. The buy would not affect the company’s repurchase plan.
The company through the deal will get a 22,000-acre phosphate mine and a processing plant in south-central Florida, another factory in Plant City. The company is presently building another phosphate mine in Hardee County. Associated with this buy the two companies have agreed that CF would supply ammonia to Mosaic starting January 2017. So Mosaic will stop planning to build an ammonia plant in Louisiana, which will save the company $1 billion.
