Vale gives up Mosaic tackeover bid - Source
The group is concerned a bid might strain relations with the Brazilian government.
Posted: Friday , 21 Aug 2009
SAO PAULO, (Reuters) -
mineweb.com
Brazilian miner Vale (VALE5.SA: Quote)(VALE.N: Quote), the world's largest iron ore producer, gave up on a planned $25 billion takeover bid for fertilizer company Mosaic (MOS.N: Quote), on concerns the deal might strain relations with the government, O Estado de S. Paulo said on Friday.
Brazilian President Luiz Inacio Lula da Silva's government lashed out at Vale this year for cutting back on investment and firing 2,000 workers amid the global economic downturn and plunging metal prices.
A bid for Mosaic, the world's largest producer of finished phosphate products, would only heighten tensions between Vale's board and top government officials, something the company wants to avoid, Estado said, citing an unnamed industry source.
"It (a bid) would only create a lot of trouble," the source told Estado.
Vale declined to comment, Estado said. The Rio de Janeiro-based miner never placed a formal bid for Plymouth, Minnesota-based Mosaic, Estado said. Mosaic is controlled by commodity giant Cargill [CARG.UL] and IMC Global.
Vale has repeatedly signaled its ambitions become the world's largest diversified mining company. But the worsening of last year's credit crisis and its failed bid for mining group Xstrata Plc (XTA.L: Quote) have slowed this ambition.
After the collapse of the estimated $90 billion bid for Xstrata, Vale changed its approach to target smaller acquisitions, with particular emphasis on the fertilizer sector. Earlier this year, Vale spent $850 million on the purchase of potash assets in Argentina and Canada.
Mosaic has operations in several U.S. states and in the potash-rich western province of Saskatchewan in Canada.
Mosaic also controls 62% of Brazilian fertilizer producer Fospar, which has a terminal at Paranagua port; a 42% stake in the Cubatao Fertilizer Industry, which mixes and distributes fertilizers in Brazil; and a nearly 20% stake in local fertilizer heavyweight Fosfertil.
Preferred shares of Vale rose 1% on Thursday to 32.46 reais, the highest since Aug. 14. Mosaic gained 2.2% to $54.47.
Mosaic shares have risen 23% since July 15, a day before Estado first reported Vale's interest on the U.S. company. (Reporting by Guillermo Parra-Bernal; nEditing by John Picinich) |
