Mosaic
Brazil's Vale , the world's largest iron ore miner, may bid for fertilizer company Mosaic Co. , which is controlled by commodity giant Cargill and IMC Global, a a Brazilian newspaper said Thursday.
Mosaic, is one of the world's largest producers of concentrated phosphate and potash, two of the primary nutrients required to grow food grains and other crops.
Global interest in potash has risen sharply in the last couple of years, as a very small group of companies controls about 75 per cent of global supply, and the price has until recently remained stubbornly high.
The report on Vale's interest in Mosaic, sent shares of the fertilizer company up 11.5 per cent to $49.70 (U.S.) on the New York Stock Exchange. The Estado de S. Paulo newspaper in Brazil estimates the deal could be worth about $25-billion, or $56 per share.
Mosaic currently has roughly 444 million outstanding shares and a market capitalization of about $22-billion.
Analysts think the deal is easily feasible for the cash-rich Brazilian mining giant.
"From a big-picture perspective it fits with Brazil's stated strategy of becoming self-sufficient in fertilizer," said Morningstar analyst Ben Johnson.
"Mosaic would be the best fit in terms of the assets that are out there, given that they have got substantial potash and phosphate assets and a distribution network that is already in place," he added.
Earlier this year, Vale spent $850-million on the purchase of potash assets in Argentina and Canada.
Vale, after failing in its estimated $90-billion bid for mining rival Xstrata over a year ago, has changed its approach and is targeting smaller acquisitions with particular emphasis on the fertilizer sector.
Minnesota-based Mosaic Co, a joint venture between Cargill and agricultural firm IMC Global, has operations in several U.S. states and in the potash-rich western province of Saskatchewan in Canada.
Mosaic also controls 62 per cent of Brazilian fertilizer producer Fospar, which has a terminal at Paranagua port. It has a 42 per cent stake in the Cubatao Fertilizer Industry, which mixes and distributes fertilizers in Brazil, while it also has a nearly 20 per cent stake in local fertilizer heavyweight Fosfertil.
A number of other companies have been scouting for potash assets and earlier on Thursday Canada's Athabasca Potash Inc. said it is exploring a possible sale of all or part of the company.
Vale told Reuters its policy was not to comment on rumours when asked about the reported bid. A spokeswoman for Mosaic was not immediately available for comment, while Cargill declined to comment.