Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Merger or Acquisition (December 2016)
18 slides from Mosaic Company (the)'s merger presentation, Dec 19, 2016
Slide 1: Mosaic’s Strategic Acquisition of Vale Fertilizantes
Mosaic’s Strategic Acquisition of Vale Fertilizantes Presenters: Joc O’Rourke, President and Chief Executive Officer Rich Mack, Executive Vice President and Chief Financial Officer Date: December 19, 2016
Slide 2: Forward Looking Statements and Non-GAAP Financial Information
Forward Looking Statements and Non-GAAP Financial Information Forward-Looking Statements This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about our proposed acquis
Slide 3: Transaction Details
Transaction Details Creating a Brazilian Powerhouse ▪ Base Purchase Price: $2.5B valuation implies 6.6x through cycle adjusted EBITDA (5 year average) • Up to $260M potential earn-out over two years ($130M following the first year; $130M following the second year) • Earn-out triggered with near-term
Slide 4: Overview: Attractive Acquisition
Overview Attractive Acquisition 1▪ High quality, long life and low cost assets: • Largest producer in Brazil, a preeminent agriculture market • World’s lowest cost producer in Central Brazil on a delivered basis 2▪ Excellent strategic fit: • Enhances Global Phosphate Business • Consistent with strat
Slide 5: Brazil: Agricultural Powerhouse
Brazil: Agricultural Powerhouse Key Region for Fertilizer Demand Growth Fertilizer (NPK) Consumption CAGR 2010–2015 6% 5.0% ▪ Big 4% 3.0% 2% 1.0% 0% (2)% (1.0)% Brazil China US/Canada India ▪ Growing 6% Fertilizer (NPK) Consumption CAGR 2015–2020F 4.5% 4% 3.2% ▪ Profitable 2% 0.6% 0.3% 0% Brazil Ind
Slide 6: Brazil: Agricultural Powerhouse
Brazil: Agricultural Powerhouse Clear Growth Trajectory Million Tonnes Brazil Grain and Oilseed Production 240 220 200 180 160 140 120 100 80 60 40 20 - 2000 2002 2004 2006 2008 2010 2012 2014 2016F 2018F 2020F Soybeans Summer Corn Second Crop Corn Wheat Cotton Others MOSAIC CONFIDENTIAL Source: CON
Slide 7: Production Asset Overview
Production Asset Overview Scale and Alignment with Market Needs Vale Phosphate Production (2013-2015 Average) P2O5 Vale Phosphate Production (2013-2015 Average) 1,950 284 Brazil Phosphate Use (2013-2015 Average) 219 224 Others Sources: Vale and ANDA Consumption defined as Production + Imports Other
Slide 8: Strategically Positioned Assets
Strategically Positioned Assets Largest Phosphate and Only Potash Producer in Brazil Illustrative Logistics example Seaborne Shipping $ 15 - $20/MT Costs Port Charges $ 10/MT Truck to Inland $ 40/MT Blenders $65-70/MT logistics advantage to key inland markets in Brazil MOSAIC CONFIDENTIAL Source: Mo
Slide 9: Overview of Acquired Business Historical Profitability
Overview of Acquired Business Historical Profitability 1 Meaningful Expected Synergies Revenue CAPEX $3,000 $500 $450 $2,500 $400 $350 $2,000 $300 $1,500 $250 $200 $1,000 $150 $100 $500 $50 $- $- 2011 2012 2013 2014 2015 LTM 2 2011 2012 2013 2014 2015 LTM 2 9/30/2016 9/30/2016 Adjusted EBITDA3 $600
Slide 10: Highly Strategic Acquisition
Highly Strategic Acquisition Significant Leverage to Cyclical Upturn Adjusted EPS Impact Illustrative Pro-forma Split ▪ Expect EPS accretion of $0.05-$0.10 cents per share Sales by Geography in 2018* plus ~$25M of cash tax benefit Other 31% North America 45% ▪ Meaningful upside leverage to phosphate
Slide 11: Committed to Maintaining an Investment Grade Rating
Committed to Maintaining an Investment Grade Rating Continue to Assess Trade-offs between CAPEX, OPEX and Dividends ▪ Historically attractive interest rate environment ▪ Track record of reducing CAPEX and lowering costs to maximize shareholder value ▪ Capital Management Philosophy: 2.0 – 2.5x Strong
Slide 12: Governance Considerations
Governance Considerations Highlights of Investor Agreement ▪ Board of Directors Representation: • Vale has the right to nominate two directors if at least 90 percent of shares maintained, one nominated if at least 50 percent • If two directors: one must be independent • Both candidates must be appro
Slide 13: Further Enhances Global Position in Phosphates
Further Enhances Global Position in Phosphates Expect Meaningful Long Term Shareholder Value Creation World’s Largest Phosphate Producers Summary (1+7) Mosaic + Vale Mosaic Vale (12.2) ▪ Opportunistic purchase during cycle (2) OCP (5.1) (8.9) trough with significant upside leverage (3) Yuntianhua (4
Slide 14: Appendix
Appendix MOSAIC CONFIDENTIAL 14
Slide 15: Earn-out Structure Triggered by Price Recovery and BRL Weakening
Earn-out Structure Triggered by Price Recovery and BRL Weakening Two-Year Earn-out: ▪ Maximum annual earn-out payment of $130M per year and $260M total ▪ Earn-out is payable if MAP Brazil CFR price and/or USD/BRL FX Rate are greater than the earn-out thresholds identified for 2017/18/19 ▪ Earn-out f
Slide 16: Accounting Impacts of Acquisition
Accounting Impacts of Acquisition Assuming closing in 2017, earnings will be impacted by the following: ▪ Integration, acquisition, and synergy costs that will be expensed as incurred. ▪ Accounting treatment of the valuation of certain assets and liabilities as of closing date: • Acquired inventory
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted EBITDA of Acquired Business Adjusted EBITDA is a non‐GAAP financial measure that is provided to assist securities analysts, investors, lenders and others in their comparisons of operational performance, valuation and debt capacity across companies with differing capi
Slide 18: Definition of Adjusted Net Debt/Adjusted EBITDA
Definition of Adjusted Net Debt/Adjusted EBITDA The company targets adjusted net debt to adjusted EBITDA as a proxy for how the rating agencies assess leverage metrics: • Adjusted net debt is defined as long‐term debt plus short‐term debt less cash and cash equivalents, all from the balance sheet. N
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