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Mosaic CFO: The Future Looks Bright

Stocks in this article: MOS POT VALE

This is part two of a two-part interview with Mosaic CFO Larry Stranghoener. Click here for part one.

TheStreet: There's been a lot of talk about how the tax ramifications of the divestment will effect any M&A the company does. And there have been reports that Mosaic had an interested buyer in the past. Did you have talks last year with Vale?
Stranghoener: I can't comment on that.

Well, how would you describe the tax implications?

This deal was structured by Cargill and Mosaic, and then the charitable trust, to accomplish a number of objectives, and that includes a tax-free distribution of shares to Cargill shareholders. With that comes a private letter ruling from the IRS. And per that tax ruling, there's a two-year period following the close, during which we face some restrictions on what we can do with our equity. Whether it's issuing it, or whether it's buying it. And that also then pertains to any M&A transaction, any takeover of Mosaic.

I think the talk you're hearing about is: does this deal make Mosaic more or less attractive as a takeover candidate? And I think that the answer to that is: over time, it probably makes it possible for us to attract a control premium if the right opportunity came along. And certainly if the right proposal came along, our board would look at it, and look at it seriously, and do what's in the best interest of shareholders. But during the next two years, there are restrictions on that possibility. So there's been a focus on, well, what if somebody came in and tried to make an offer, what would happen? That's become pure speculation. Again, suffice it to say, there are certain restrictions for the next two years, and beyond that there would be no restrictions.

Are there restrictions on buybacks, too?

Mosaic CFO Larry Stranghoener

There are restrictions, yes. We're limited to.... Well, unless you want the specifics, let's just say yes, there are restrictions on buybacks too.

So you can do buybacks, but there's a size limit?

We can do buybacks on a limited basis within this two year period.

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