Vale has entered into a stock purchase agreement to sell its fertilizer business to Mosaic, excluding its nitrogen and phosphate assets in Cubatão, Brazil.
Upon completion of the transaction, Vale will sell to Mosaic the phosphate assets located in Brazil, except the ones based in Cubatão; its shareholding position in Bayóvar, Peru; the potash assets located in Brazil, including the Carnalita project; and the potash project based in Canada (Kronau). The inclusion of the Rio Colorado potash project in the transaction perimeter is subject to Mosaic's agreement following appropriate diligence.
Vale's assets located in Cubatão, which are mostly dedicated to nitrogen nutrients and accounted for an adjusted EBITDA of US$ 108 million in 2015, will be carved out from Vale Fertilizantes prior to the completion of the transaction with Mosaic. Vale expects to explore the sale of Cubatão assets during 2017.
The transaction with Mosaic provides value of approximately US$ 2.5 billion, consisting of US$ 1.25 billion in cash and approximately 42.3 million shares of common stock to be issued by Mosaic. This number of shares currently represents about 11% of Mosaic's total outstanding shares of common stock on a post-issuance basis. Following completion of the transaction, Vale will also have the right to appoint two directors to Mosaic's board of directors.
Consummation of the transaction is expected to occur in late 2017.