Cargill to Split-Off Mosaic Share for $24.3bn

In carrying out the transaction, Cargill plans to exchange approximately 179 million of its 286 million Mosaic shares with Cargill shareholders, including the Charitable Trusts, for all or a portion of their Cargill stock.

1/19/2011 --- Cargill Inc. plans to split off its majority stake in Mosaic Co., North America’s second-largest fertilizer producer, in a $24.3 billion deal.

Mosaic, which is one of the world's leading providers of crop nutrients and feed ingredients for the global agriculture industry, and Cargill jointly announced a transaction that would result in the distribution of Cargill's 64 percent stake, or 286 million share position, in Mosaic to Cargill's shareholders and debt holders.

Cargill states that the transaction will enable Cargill to accomplish several important objectives, including maintaining its status as a private company while meeting the diversification and distribution needs of the charitable trusts and foundation (collectively the "Charitable Trusts") formed through the estate planning of Margaret A. 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.

The transaction is expected to benefit Mosaic by improving its long-term strategic and financial flexibility, as well as greatly increasing the liquidity of Mosaic's common stock. As a result of the transaction, there will be no change to Mosaic's total outstanding shares, the economic rights of the Mosaic shares or earnings per share. The transaction also is not expected to have any impact on Mosaic's underlying financial performance or current business operations.

In carrying out the transaction, Cargill plans to exchange approximately 179 million of its 286 million Mosaic shares with Cargill shareholders, including the Charitable Trusts, for all or a portion of their Cargill stock. Cargill expects to exchange all of its remaining 107 million Mosaic shares for Cargill debt owned by third parties. Pursuant to a ruling from the U.S. Internal Revenue Service, the transaction is expected to be tax free to Cargill, Mosaic and their respective shareholders. Mosaic, Cargill and the Charitable Trusts have entered into a series of agreements to effect the transaction, including terms intended to provide for an orderly disposition of the Mosaic shares. The transaction is expected to close in the second calendar quarter of 2011.

Jim Prokopanko, Mosaic's president and chief executive officer, said, "This transaction will bring significant benefits to our company and shareholders. Going forward, we will be better positioned to capitalize on the positive outlook for our industry, retain our market leading positions and reinforce our existing competitive advantages. Importantly, there will be no adverse impact to our earnings potential, strong balance sheet or ability to generate cash."

Greg Page, Cargill's chairman and chief executive officer, said, "The transaction will accomplish a number of important business objectives for both Cargill and Mosaic and is in the best interests of both companies. Mosaic has been a landmark investment for Cargill. We are proud of what Mosaic and its employees have accomplished and remain confident in the company and its future. We look forward to continuing our commercial relationship with Mosaic, which strengthens Cargill's ability to deliver high-value solutions to our farm customers around the world."

Mosaic's board of directors formed a Special Committee consisting solely of independent directors to evaluate and negotiate the transaction. Upon the Special Committee's recommendation, Mosaic's board of directors has approved the transaction. The transaction is subject to approval by holders of a majority of Mosaic's shares held by non-Cargill shareholders. Cargill's board of directors also has approved the transaction. Cargill retains the right to terminate the transaction subject to payment of a termination fee to Mosaic's minority shareholders under certain circumstances.

The transaction involves a recapitalization of Mosaic's stock and contains terms intended to provide for an orderly disposition of Cargill's 286 million shares in Mosaic.

Pursuant to the transaction agreements, all of Mosaic's shares will be recapitalized into three classes of stock: Common Stock, Class A Stock and Class B Stock, all of which will have the same economic rights. The Common Stock and Class A Stock will have one vote per share on all matters, whereas the Class B Stock will have the right to cast 10 votes per share solely for the election of directors. The Class A Stock and the Class B Stock will be subject to transferability restrictions and will not be publicly traded. The Common Stock, which will continue to trade under the ticker symbol MOS, will not be subject to restrictions on transferability.

All Mosaic shareholders, not including Cargill, will receive one share of Common Stock, representing the same economic value as their current share of Mosaic common stock. Cargill's 286 million shares of common stock are expected to be recapitalized into approximately 115 million shares of Common Stock, 60 million shares of Class A Stock and 111 million shares of Class B Stock. Exact share counts will be determined upon completion of the transaction.

In connection with the transaction agreements, Cargill will conduct an exchange offer in which it will offer Cargill shareholders the opportunity to exchange all or a portion of their Cargill shares for approximately 179 million Mosaic shares currently held by Cargill. In addition, Cargill expects to exchange approximately 107 million shares of its Mosaic Common Stock with its debt holders for outstanding Cargill debt. The Charitable Trusts, which are large shareholders of Cargill, have agreed to exchange all of their Cargill shares for Mosaic shares in the split-off.

Upon completion of the split-off, Mosaic shares held by the Charitable Trusts and Cargill stockholders participating in the exchange will represent approximately 40 percent of Mosaic's total outstanding shares and at least 81 percent of the total vote with respect to the election of Mosaic's board of directors.


Under the terms of a registration agreement, Mosaic has agreed to conduct registered secondary offerings within 15 months of the closing of the split-off for the resale of approximately 157 million Mosaic shares.

•    The first of the offerings is to be completed immediately following the recapitalization and split-off and is expected to consist of at least half of these 157 million Mosaic shares.
•    During the course of these offerings, Cargill debt holders are expected to sell approximately 107 million Mosaic shares and the Charitable Trusts are expected to sell approximately 50 million Mosaic shares.

All Mosaic shares received by the Charitable Trusts and other Cargill shareholders in the split-off and not sold in the formation offerings (approximately 129 million shares) generally may not be transferred during the first two and a half years after the closing of the split-off.
•    The transfer restrictions on these Mosaic shares would be released, and the shares would become transferable, in three equal annual installments beginning on the two-and-half-year anniversary of the split-off.
•    To facilitate an orderly disposition of these shares, pursuant to the registration agreement, Mosaic has agreed that it will register these Mosaic shares for resale in secondary offerings at the request of the Charitable Trusts. These offerings could occur each year after the second anniversary of the split-off, with the first offering occurring no earlier than one year after the last formation offering described above. The Charitable Trusts and other shareholders of Cargill who received Mosaic shares in the split-off would have the ability to participate in these offerings.

The closing of the transaction is subject to certain conditions, including: (i) approval by the majority of Mosaic's minority shareholders; (ii) the receipt of certain regulatory approvals; (iii) no withdrawal or adverse change to the IRS ruling obtained with respect to the transaction; and (iv) other customary conditions. Accordingly, there can be no assurance as to when the transaction described above will occur and it is possible that it may not occur at all.

Under the transaction terms, Mosaic would be subject to certain agreements with Cargill that will have some limitations on Mosaic's corporate activities for two years after the split-off.

There are no changes currently contemplated with respect to Mosaic's board of directors in connection with the transaction. Following completion of the transaction, Mosaic's board of directors may consider submitting a proposal to a shareholder vote to convert the Class B Stock with special voting rights into regular voting stock.

Credit Suisse Securities (USA) LLC acted as financial advisor to Cargill, and Fried, Frank, Harris, Shriver & Jacobson LLP provided legal counsel to Cargill. J.P. Morgan Securities LLC acted as financial advisor to the Special Committee of Mosaic's Board of Directors, and Simpson Thacher & Bartlett LLP acted as legal counsel to the Special Committee. UBS Investment Bank acted as financial advisor to the Charitable Trusts, and Loeb & Loeb LLP acted as legal counsel to the Charitable Trusts.