The world's biggest phosphate fertilizer producer, Minnesota's Mosaic Co., will get bigger with a $1.4 billion deal to buy the Florida-based phosphate business of CF Industries Inc.
The deal announced Monday will give Plymouth-based Mosaic a large mine southeast of the Tampa Bay area and close to Mosaic's existing phosphate operations. The purchase also includes a CF processing plant, which means Mosaic can forego building a proposed new plant of its own — saving $500 million.
"The proximity of the CF assets gives us significant advantages and the transaction is very appealing financially, both in terms of capital expenditures and earnings," Mosaic's Chief Financial Officer Larry Stranghoener said in a conference call with stock analysts.
Mosaic's stock rose 73 cents, or 1.6 percent, closing Monday at $46.67.
Mosaic is one of the world's largest fertilizer makers, mining potash and phosphate and respectively turning them into crop nutrients containing potassium and phosphorus. The company's main potash operations are in Saskatchewan; its phosphate operations in south central Florida.
Several analysts hailed the deal with suburban Chicago-based CF Industries.
"We believe this is a positive for [Mosaic], as it provides the company with more phosphate scale and flexibility, and the price paid is not expensive," Joel Jackson, an analyst with BMO Nesbitt Burns, wrote in a research report.
Mosaic will spend $1.2 billion in cash and another $200 million to fund CF's asset retirement obligation escrow. The purchase is expected to add about 30 cents a share to 2015 earnings. Stranghoener said it will not effect Mosaic's stock buyback program.