Mosaic to Buyback 43.3M MAC Trusts Shares - Analyst Blog
December 10 2013 - 5:05PM
Zacks
Fertilizer maker The Mosaic Company (MOS) has
landed an agreement to buyback 43.3 million shares from the
Margaret A. Cargill Foundation and the Anne Ray Charitable Trust
(“the MAC Trusts”) over the next eight months.
Under the share repurchase agreement, the Minnesota-based company
will buy 21.7 million of the MAC Trusts' Class A shares on January
8, 2014. The balance 21.6 million shares will be bought by Mosaic
beginning in February 2014 in seven equal installments. The
purchase price will be determined by the volume weighted average
closing price of the company’s common stock during the preceding
20-day trading period.
Mosaic was formed in 2014 through the combination of the fertilizer
businesses of agribusiness giant Cargill Incorporated and IMC
Global Inc.
Cargill sold its 64% interest (285.8 million shares) in Mosaic in
2011 in a split-off to its shareholders, including the MAC Trusts,
and a debt exchange with some of its debt holders. Following the
stake sale, the MAC Trusts and Cargill debt holders sold 157
million of these shares in secondary offerings or to Mosaic,
thereby completing the disposition of shares designated to be sold
during the 15-month period after the split off.
The remaining 128.8 million shares received by the MAC Trusts and
other shareholders were subject to transfer restrictions, which
were removed on Nov 26, 2013. Mosaic has been in talks with Cargill
and the MAC Trusts, following May 26, 2013, regarding the
disposition of the Class A shares, including potential share
repurchases.
The repurchase deal represents a significant step in achieving
Mosaic’s objective of having a more efficient balance sheet by the
middle of next year. The company is also looking for other options
to return value to shareholders.
Mosaic’s shares, which are down roughly 17% so far this year, fell
1.7% to close at $46 yesterday.
Fertilizer producers are grappling with weak pricing. Mosaic and
other fertilizers makers face significant challenges following the
exit of world's largest potash maker Uralkali Group from one of the
biggest potash cartels – the Belarus Potash Company (BPC).
Mosaic had a lackluster third-quarter 2013, reported on Nov 5, with
profit tumbling 70% year over year to $124 million or 29 cents per
share. The bottom line was hit by lower potash and phosphate
pricing, cautious buyer behavior and a late fall application season
in North America.
Revenues fell roughly 28% year over year to $1,908.7 million.
Double-digit declines across phosphate and potash franchises on
lower selling prices dragged down the top line. The company
witnessed lower sales volumes in both businesses in the
quarter.
While Mosaic envisions healthy demand in North America based on
excellent crop nutrient affordability, it expects a challenging
pricing environment.
Mosaic is a Zacks Rank #4 (Sell) stock.
Other stocks in the fertilizer and related industries with
favorable Zacks Rank are China Bluechip ADR
(CBLUY), The Andersons, Inc. (ANDE) and
The Scotts Miracle-Gro Co. (SMG). While China
Bluechip and The Andersons carry a Zacks Rank #1 (Strong Buy),
Scotts Miracle-Gro holds a Zacks Rank #2 (Buy).
ANDERSONS INC (ANDE): Free Stock Analysis Report
CHINA BLUECHEM (CBLUY): Get Free Report
MOSAIC CO/THE (MOS): Free Stock Analysis Report
SCOTTS MIRCL-GR (SMG): Free Stock Analysis Report
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