Cargill puts fertilizer producer Mosaic into play

Cargill Inc, the largest privately held US company, yesterday said that it will relinquish its majority stake in fertiliser producer The Mosaic Co – a move that will result in a takeover battle for the $24.3 billion potash producer.

The transaction will be watched with keen interest by Anglo Australian mining giant BHP Billiton, which failed last year in its $39 billion bid for Mosaic's bigger rival, PotashCorp of Saskatchewan, but is still looking at buying a potash company.

In a complicated three-step transaction that the board of Mosaic has agreed to and the deal is expected to conclude in the second quarter of 2011, Minnesota-based Cargill will distribute its 64-per cent stake in Mosaic to Cargill's shareholders and debt holders.

The transaction will enable Cargill to maintain its status as a private company while meeting the diversification and distribution needs of the charitable trusts and foundation formed through the estate planning of Margaret Cargill, one of Cargill's largest shareholders, who died in 2006.

''The transaction also will enhance Cargill's credit profile and ensure that the company's financial results, compensation plans and management focus are fully aligned with the performance of the businesses Cargill directly manages,'' said Cargill in a statement.

Once the transaction is complete, Mosaic, whose crown jewels are its three potash production facilities in Saskatchewan in Canada, will become a prime candidate for a takeover.