US agribusiness giant Cargill has decided to spin off its majority stake in fertilizer business Mosaic Co.
Cargill is to exchange its 64% stake in Mosaic to its own shareholders and debtholders in a deal worth a reported US$24bn.
Under the terms of transaction, Cargill plans to swap around 179m of its 286m shares in Mosaic with Cargill’s shareholders for all or a portion of their stock.
The US group said it expects to exchange the remaining 107m shares for Cargill debt owned by third parties.
Cargill said the deal would enable it to remain a private company while meeting the “diversification and distribution needs” of the charitable trusts and foundation formed through the estate of Margaret Cargill, one of the company’s largest shareholders, who died in 2006.
Cargill chairman and CEO Greg Page said: “The transaction will accomplish a number of important business objectives for both Cargill and Mosaic and is in the best interests of both companies. Mosaic has been a landmark investment for Cargill. We are proud of what Mosaic and its employees have accomplished and remain confident in the company and its future. We look forward to continuing our commercial relationship with Mosaic, which strengthens Cargill’s ability to deliver high-value solutions to our farm customers around the world.”
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Last week, Cargill reported that second-quarter profits had more than tripled. The company booked net earnings of US$1.49bn for the three months to 30 November, up from $489m a year ago, as the group benefited from rising commodity prices.
As well as the benefit from higher commodity prices, Cargill was also lapping last year’s second quarter, when profits from The Mosaic Co. were hit by lower crop fertilizer prices.
Nevertheless, excluding its stake in fertilizer firm The Mosaic Co., in this year’s second quarter, Cargill earned $832m, almost double the $420m it generated last year.