Mosaic acquisition of Fertinal unlikely – traders

15 June 2010 17:29  [Source: ICIS news]

LONDON (ICIS news)--It is unlikely that US phosphate fertilizer producer Mosaic will acquire Mexican producer Fertinal despite the latest press speculation that it is planning to do so, trader sources in the fertilizer market said on Tuesday.

Earlier, press reports said the US giant, one of the world’s largest phosphate producers, was in talks to buy Fertinal in a deal worth possibly $1bn.

The report also said the two companies had been in discussions for as long as six months, but a deal had not been reached and talks could yet collapse.

“It’s very unlikely,” said one seasoned trader. “There’s no fit there – the styles of management of the two companies are too different.

“I’m willing to bet that the deal won’t happen,” the source added.

Another trader agreed. “I thought this deal never got off the ground six months ago and was dead in the water. I’m surprised at the latest reports.”

Fertinal restarted its Lazaro Cardenas plant a couple of years ago following hurricane damage to the plant, which had led to the facility being idled for some years.

However, the producer has quickly established itself as a major exporter of phosphate fertilizer with access to its own supply of phosphate rock. The plant currently produces around 80,000 tonnes/month of fertilizer, which it exports to regional markets as well as export destinations such as India, where enjoys a long-term, 250,000 tonne/year contract.

Since the plant’s restart, US producers have seen exports of phosphates to Mexico and Latin America decline as Fertinal has taken market share.

US phosphate producers face the twin problem of dwindling quality phosphate rock supplies and ever increasing restrictions on their right to mine new reserves on the US mainland, which traders believe may be one reason behind Mosaic’s interest in Fertinal.

Sources at Mosaic were unwilling to comment on market speculation, while no one at Fertinal was available for comment.

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By: Mike Nash
+44 20 8652 3214

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