Mosaic deal for Vale fertilizer business may be too pricey, shareholder says

|About: The Mosaic Company (MOS)|By:, SA News Editor

Vale (VALE +2.6%) and Mosaic (MOS +0.5%) recoup a bit of yesterday's losses following the Brazilian company's $2.5B sale of its fertilizer business that also makes it MOS's biggest shareholder.

The price paid and the leverage involved "could prove too high/risky, though we understand the 'once-in-a-lifetime opportunity' to acquire large assets in the fastest growing agriculture/fertilizer market," says Michael Underhill, chief investment officer of Capital Innovations, a MOS shareholder.

Analysts at Banco BTG Pactual estimate MOS is paying 8.6x the fertilizer division's EBITDA, calling it an attractive multiple.

MOS says it expects the deal to add to EPS by 2018, and the Brazilian unit will become the company's largest by trading volume, surpassing North America, although the North Americas unit will still lead in production.

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