Vale Acquires 78.9% Interest in Brazilian Fosfertil for $4 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Brazilian miner Vale S.A. (NYSE:VALE) (Rio de Janeiro) recently announced the signing of an option agreement with American company The Mosaic Company (NYSE:MOS) (Plymouth, Minnesota), in which Vale acquired the rights to buy Mosaic's direct and indirect interest in Fertilizantes Fosfatados S.A. (Fosferti) (Sao Paulo), Brazil's largest fertilizer company. Through a $1.03 billion transaction, Vale has the rights to acquire a 20.25% stake in the equity capital of Fosfertil.

The agreement also grants Vale rights to acquire a 300,000-metric-ton-per-year SSP (superphosphate) processing plant from Mosaic for $50 million. The plant is in Cubatao, Sao Paulo state, in southern Brazil.

The deal is subject to certain conditions, such as the closing of Vale's previously announced purchase of Bunge Group's (NYSE:BG) (New York) fertilizers business in Brazil. According to the company's recent press release, Vale has agreed to pay in cash $3.8 billion for the full acquisition of Bunge Participacoes e Investimentos S.A. (Sao Paulo, Brazil), including its interest in Fosfertil. Through the transaction, Vale will acquire Bunge's Brazilian phosphate rock mines and phosphates assets for $1.65 billion, and a direct and indirect stake of 42.3% in the equity capital of Fosfertil, in a $2.15 billion investment.

After having signed other option agreements with Fosfertil's shareholders, Vale has now consolidated its major interest in the company with 78.90% of its equity capital in a $4 billion investment. The transactions reflect Vale's strategy to become a leading global player in the fertilizer sector.

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