Fertilizer company Mosaic ( MOS) has reached a deal with certain Cargill family trusts to buy back roughly 8.2 million Class A shares. The shares to be bought back are included under the recently announced $1 billion share repurchase authorization.
The repurchases have been structured in two tranches, first of which (representing around 2.4 million shares) was completed on Feb 14 at a price of $46.43 a share. The second repurchase (of roughly 5.8 million shares) will be executed on Mar 17 at a share price based on a formula tied to the volume weighted average price of Mosaic’s common shares during a 20-day trading period starting Feb 14.
Mosaic’s board, on Feb 11, approved a $1 billion share repurchase program, allowing it to buy back Class A or common shares through direct repurchases or open market transactions. This is in addition to the earlier announced agreement to repurchase 43.3 million Class A shares from the Margaret A. Cargill Foundation and the Anne Ray Charitable Trust (“the MAC Trusts”) in the first seven months of 2014.
Mosaic, in late 2013, landed an agreement to buy back 43.3 million shares from the MAC Trusts. The Minnesota-based company, last month, completed the repurchase of 21.65 million restricted Class A shares at a price of $45.77 per share.
The repurchase deal represents a significant step in achieving Mosaic’s objective of having a more efficient balance sheet by the middle of this year. The company is also looking for other options to return value to shareholders.
Mosaic’s profit slid roughly 79% year over year in the fourth quarter of 2013 on lower potash and phosphate pricing. Revenues slipped roughly 8% year over year as the company saw declines phosphate and potash businesses in the quarter.
Mosaic, which is one of the leading fertilizer makers along with Potash Corp. ( POT), Agrium ( AGU) and CF Industries ( CF), sees improving market conditions and expects potash prices to improve later in 2014. It is well placed to leverage the rising global demand for grain and oilseeds.
Mosaic is a Zacks Rank #3 (Hold) stock.