The U.S.-based Mosaic Co. (NYSE: MOS) has decided to sell the Saudi Arabian mining company Ma’aden its 25% stake in the Ma’aden Wa’ad Al Shamal Phosphate Company (MWSPC), a joint venture valued at about $8 billion, in a stock transaction estimated to be worth $1.5 billion. This is a strategic move within the global fertilizer industry. With this move, Mosaic’s investment goals have significantly changed, and Ma’aden’s position in the phosphate market is strengthened.
Ma’aden, the largest mining company in Saudi Arabia, currently owns 60% of MWSPC and plans to purchase Mosaic’s part by the issuance of roughly 111 million shares. Through this deal, Ma’aden will increase its capacity to produce phosphate, a vital ingredient in world agriculture, and consolidate its ownership. Saudi Arabia is a partner in the joint venture.
The MWSPC operates a comprehensive phosphate production facility, which includes a phosphate mine, beneficiation facilities, and plants for phosphoric and sulphuric acid, supported by power plants and various downstream business units. With an impressive annual production capacity of approximately 3 million tonnes of phosphate fertilizer products, MWSPC plays a vital role in the phosphate fertilizer market globally.
Mosaic, which has been a part of this joint venture for over a decade, indicated earlier in February that a substantial portion of the venture’s revenue had been allocated towards reducing its debt. The company also signaled that continuing investment in the venture was no longer a strategic priority, prompting this divestiture.
Bruce Bodine, President and CEO of Mosaic, commented on the collaboration’s evolution, stating, “This is an important evolution that we believe will create significant benefits for the growth of our phosphate business.” He also noted that despite the shift in ownership, the partnership between Mosaic and Ma’aden would endure under a new structure.
“We look forward to working together with the Mosaic team to strengthen our phosphate business as we continue to build the mining sector into the third pillar of the Saudi economy,” said Bob Wilt, CEO of Ma’aden, echoing this sentiment and highlighting the transaction’s significance for Saudi Arabia’s larger economic goals.
With the usual closing conditions met, the transaction is expected to close before the end of the current year. Mosaic shall hold the shares it gets in Ma’aden for a minimum of three years in accordance with the conditions of the agreement. During the third, fourth, and fifth years after the deal’s closure, one-third of the shares will become transferable on each anniversary.
