The split-off between Cargill and Mosaic will be a 286million tax-free transaction that was announced on January 18th, 2011 and that will release 64% stake that Cargill has over Mosaic.
Cargill is an international producer and marketer of food, agricultural, and industrial products and services founded in 1865. The company is the largest privately held corporation in the United States and their main focus is purchasing, processing, and distributing grain and other agricultural products.
Mosaic, is a leading producer of concentrated phosphate and potash crop nutrients with the unique ability to deliver large amounts of product with short notice. They control a major part of ...view middle of the document...
Currently Cargill holds an A2 credit rating according to Moody’s. A change to AA or AAA could definitely have an impact in the company´s ability to get low cost financing and better returns for the company.
Cargill will be able to focus on the core business
With a clean debt balance sheet and taking off Mosaic from the books, Cargill will now be able to access to better credits from suppliers or financial institutions. This will reflect in an increased amount of inventories that will improve the amount of “trades”, the ROE and the bottom line of the business.
Mosaic will improve its independence and long-term strategic planning
With the split-off, Mosaic Corporation will be a company with strategic autonomy and independent decision making. The commercial relations between the two companies will remain in good terms, while the management will be able to position the company for the next generation of crop nutrients business.
The Bottom line
The Mosaic Corporation and Cargill...