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Temasek harvests Mosaic stake

by Lou Whiteman  |  Published December 21, 2011 at 1:08 PM
Singapore's state-owned investment firm has amassed a 6.5% stake in Mosaic Co., building its holding in the one-time Cargill Inc. unit that ranks as the second-largest fertilizer producer in North America.

Temasek Holdings Pte. Ltd. owns 17.9 million shares of Plymouth, Minn.-based Mosaic, up from 108,026 shares held as of Sept. 30, according to regulatory filings.

The stake, valued at about $850 million based on Tuesday's closing price, vaults Temasek past Wellington Management Capital as the largest shareholder in Mosaic.

Despite increasing demand for fertilizer from emerging markets, shares of Mosaic have lost about half of their value since February amid dashed hopes for consolidation in the sector.

Mining giant BHP Billiton Ltd. put the spotlight on fertilizer last year with its ultimately unsuccessful $40 billion hostile bid for Potash Corp. of Saskatchewan Inc., and some analysts saw Mosaic as an attractive alternative target for Billiton or Vale SA.

Cargill, which formed Mosaic in 2004 by merging its fertilizer business with IMC Global, at the beginning of the year owned 64% of Mosaic's shares.

Market rumors surfaced that Cargill had shopped Mosaic, but was unable to generate a valuation for the company to justify the tax hit it would have taken in a sale.

Shares of Mosaic traded up less than 1%, or 17 cents, at open to $50.10, well below its 52-week high of $89.24.

In addition to the faded M&A prospects, fertilizer stocks have been hurt in recent months by declines in the price of corn, a key variable in estimating how much fertilizer farmers will purchase.

Mosaic is unlikely to end up in play any time soon. Cargill's tax-free divestiture process according to analysts effectively pushed Mosaic to the sidelines for two years, eliminating its ability to pursue share buybacks and limiting its deal prospects.

Temasek has about $150 billion in investments. The firm in recent months has been building its stake in China Construction Bank Corp., and according to reports, the fund has been working with Alibaba Group Holding Ltd. on that Chinese company's bid for Yahoo! Inc.
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Tags: fertilizer | Mosaic Co. | Singapore | Temasek Holdings Pte.

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