Mosaic stock up on buyout talk; Athabasca considers sale; Alpha investor questions merger

By Cristal Cody

Tupelo, Miss., July 16 - Shares of Mosaic Co. jumped Thursday on a Brazilian newspaper's report that mining giant Vale SA will bid for the U.S. fertilizer company.

In other deals, Athabasca Potash Inc. said Thursday it is exploring a possible sale of all or part of the Canadian company, an offer that could attract investor interest from China or India, an analyst told Prospect News.

Meanwhile, a shareholder in Alpha Natural Resources, Inc. splashed some doubt on the company's $1.5 billion stock acquisition of Foundation Coal Holdings Inc. on Thursday.

On Wall Street, stocks inched up. The Dow Jones Industrial Average added 95.61 points, or 1.11%, to close at 8,711.82.

The Standard & Poor's 500 index rose 8.06 points, or 0.86%, to 940.74, and the Nasdaq Composite index added 22.13 points, or 1.19%, to 1,885.03.

Ag consolidation ahead?

Investors sent shares of Mosaic up $5.43, or 12.19%, to close at $49.98 on Thursday. The stock has traded from $21.94 to $142.96 over the past year.

Plymouth, Minn.-based Mosaic, a publicly traded Cargill, Inc. subsidiary, is a major producer of phosphate and potash crop nutrients.

Rio de Janeiro-based Vale is said to be targeting smaller firms after it failed in its bid last year to buy Zug, Switzerland-based mining company Xstrata plc.

Vale and Cargill representatives were not immediately available for comment.

Mosaic spokesman Linda Thrasher told Prospect News on Thursday the company does not comment on market rumors.

Vale American Depositary Shares fell 3 cents, or 0.17%, to close at $18.04.

Xstrata shares closed up 0.38% at 663.50p.

Athabasca considers sale

Saskatoon, Saskatchewan-based Athabasca, which produces potash, a key crop nutrient, said Thursday that it received several queries after it announced in March it was considering joint venture deals.

In response, the company has expanded the scope to include "potential mergers or potential acquisitions of all or a portion of the company or its business."

Shares of Athabasca soared C$1.43, or 35.05%, to close at C$5.51 on Thursday. The stock has traded from C$0.75 to C$7.80 over the past year.

The company said it has retained CIBC World Markets and Genuity Capital Markets as financial advisers for talks with several potential bidders.

Possible bidders mentioned by market observers for Athabasca include China, the world's largest potash importer, as well as BHP Billiton plc, Potash Corp. of Saskatchewan Inc., Mosaic and Agrium Inc.

Robert B. Winslow, an analyst with Wellington West Capital Markets Inc., told Prospect News on Thursday there has been little investment activity in the potash sector, but it's believed China will step up purchases to secure a supply for the next few years.

Athabasca has been talking to potential partners "for some time now, as have most juniors in the potash space," said Winslow, who targets the stock at C$7.00 a share. "The only activity we've seen of significance was a Chinese investor in Mag Industries [Corp.] that's building a potash mine in the Republic of Congo."

Ontario-based Mag said in June that it has a memorandum of understanding with a Chinese company that intends to subscribe for 400 million shares at a price of C$0.70.

Mag shares closed Thursday unchanged at C$0.56.

BHP shares were up 0.01% at 1,435.71p.

Potash shares added C$4.35, or 4.44%, to close at C$102.33.

Agrium shares gained $1.94, or 5.05%, to $40.38.

Shareholder questions Alpha buy

Duquesne Capital Management, LLC, which holds 8.31% of Alpha's outstanding stock, said it has concerns with Alpha's acquisition of Foundation Coal, according to a schedule 13D filing with the Securities and Exchange Commission on Thursday.

The firm said the funds it represents are "currently evaluating their position with respect to the proposed merger."

According to the filing, Duquesne has spent about $189 million of capital on behalf of several investment funds to acquire Alpha shares since May 4.

Alpha and Foundation shareholders will vote July 31 on the merger, which was first announced on May 12.

Under the terms of the agreement, Foundation Coal shareholders will receive 1.084 shares of the new company for each share of Foundation Coal, which values the stock at about $32.73 a share.

In a separate filing with the SEC on Thursday, Foundation Coal said in an "integration update" that the merger is a "great deal."

"Together, we will have 2.30 billion tons of reserves, which means we have decades of mining potential out before us," the company said. "Furthermore, this merger will make our combined company the third-largest coal producer in the United States by almost any measurement."

Linthicum Heights, Md.-based Foundation produces thermal coal from mines and facilities in Pennsylvania, West Virginia, and Wyoming.

Abingdon, Va.-based Alpha is the nation's largest supplier of metallurgical coal to the steel industry.

Foundation's stock closed up $2.11, or 7.72%, at $29.44 on Thursday.

Alpha shares gained $2.26, or 8.87%, to close at $27.73.

Mentioned in this article:

Agrium Inc. NYSE: AGU

Alpha Natural Resources, Inc. NYSE: ANR

Athabasca Potash Inc. Toronto: API

BHP Billiton plc London: BLT

Foundation Coal Holdings Inc. NYSE: FCL

Mag Industries Corp. TSX Venture: MAA

Mosaic Co. NYSE: MOS

Potash Corp. of Saskatchewan Inc. Toronto: POT

Vale SA NYSE: VALE

Xstrata plc London: XTA

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