Mosaic’s Early Share Buyback Blocked by Cargill Family

Mosaic Co., the largest U.S. fertilizer producer, said Cargill family members blocked its request for an early buyback of $7.2 billion of shares.

Mosaic was split off from commodity trader Cargill Inc. in 2011, which left 129 million Class A shares in the hands of Cargill family members and charitable trusts established by the late Margaret A. Cargill.

Mosaic has been in talks with those parties following the second anniversary of the announcement of that transaction last month, Plymouth, Minnesota-based Mosaic said today in a statement. While the Margaret Cargill trusts supported a negotiated buyback of stock before Nov. 26, the family members declined to amend the agreement that governs when and how the shares can be sold.

“Mosaic is disappointed in its inability to effect share repurchases this summer and looks forward to initiating share repurchases after Nov. 26,” Mosaic said in the statement.

Lori Johnson, a Cargill spokeswoman, wasn’t immediately available to respond to a Bloomberg request for comment from Cargill family members.

About half of the Mosaic Class A shares are held by the estate of Margaret Cargill, the late granddaughter of company founder William Cargill, and the other half by members of the Cargill family, Mosaic Chief Financial Officer Larry Stranghoener said on a May 13 conference call. He said on the call that Mosaic has about $5 billion of surplus cash and available debt capacity to be used for share repurchases and other uses.

Buyback Delay

“All we really have here is a delay by about five months in Mosaic’s ability to buy back shares on the open market,” Mark Gulley, a New York-based analyst at BGC Partners LP, said today in a telephone interview. As for shares held by Cargill family members and the charitable trusts, Gulley said he doesn’t expect Mosaic to attempt to buy back all 129 million at once.

Mosaic fell 0.7 percent to $55.50 at 4:52 p.m. in New York after the close of regular trading. The shares had dropped 1.3 percent this year.

Closely held Cargill divested its 64 percent Mosaic stake to allow trustees of the Margaret Cargill estate to sell all its Cargill shares. The transaction was completed May 2011.

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