Mosaic sells Saudi JV stake to Ma’aden for US$1.5B

U.S. fertilizer company Mosaic (NYSE: MOS) is selling its 25% stake in a US$8 billion Saudi Arabian phosphate production joint venture to the country’s flagship miner Ma’aden, in a stock deal worth about US$1.5 billion.

Ma’aden, which already holds a 60% stake in Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC), will issue about 111 million shares to buy Mosaic’s stake in the venture, a partnership that also includes Saudi Basic Industries, with a 15% interest.

“This is an important evolution that we believe will create significant benefits for the growth of our phosphate business,” Bob Wilt, CEO of Ma’aden, added. “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.”

Mosaic had warned in February that a significant portion of the revenue generated from the asset was used to decrease debt, and that investing in the venture was not one of the company’s top priorities.

Fertilizer products

The MWSPC has a phosphate mine, beneficiation facilities, phosphoric acid and sulphuric acid facilities, power plants, and downstream business units. It has an annual production capacity of about 3 million tonnes of phosphate fertilizer products.

Mosaic and Ma’aden have worked together for over a decade. The two companies will continue to work together under the evolved structure, Bruce Bodine, the U.S. fertilizer producer’s president and CEO has said.

The deal is expected to close by the end of this year. As part of the agreement, Mosaic is required to hold its Ma’aden shares for a minimum of three years, with one-third of the shares becoming transferable after the third, fourth and fifth anniversary of the closing.

Mosaic shares traded at US$30.80 apiece on Tuesday morning, valuing the company at US$9.9 billion. Its shares traded in a 52-week range of US$29.25 and US$43.99.