Maaden to acquire Mosaic Phosphates stake in Wa'ad Al Shamal by issuing new shares

Saudi Arabian Mining Co. (Maaden) headquarters

Saudi Arabian Mining Co. (Maaden) concluded a stock purchase and subscription agreement (SPSA), on April 29, with Mosaic Company (guarantor) and Mosaic Phosphates B.V. in. (seller).

Maaden will acquire the seller’s entire share in Ma'aden Wa'ad Al Shamal Phosphate Co. (MWSPC), comprising 210.94 million shares, representing 25% of MWSPC’s capital, according to a statement on Tadawul.

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The deal also includes Maaden acquiring the guarantor’s rights under the MCP/DCP product marketing agreement, and the fertilizer product marketing agreement signed between the guarantor and MWSPC on April 24, 2014.

MWSPC is a joint venture between Maaden, Mosaic Phosphates and Saudi Basic Industries Corporation (SABIC), based in Saudi Arabia. The company operates an integrated phosphate production facility with a design capacity of three million tons of diammonium phosphate (DAP).

Under the agreement, the guarantor is committed to guaranteeing the seller's liabilities on time as they fall due in accordance with the terms and conditions of the agreement.

Based on the valuation of SAR 5.62 billion, the acquisition consideration will be paid through the issuance of new shares in Maaden to the seller (or any affiliate of the seller). The shares will be determined using the volume-weighted average price (VWAP) of Maaden shares. The new shares will represent approximately 2.92% of Maaden’s capital following the completion of the acquisition deal.

Accordingly, Maaden’s capital will grow by SAR 36.92 billion to SAR 38.03 billion, by issuing 111.01 million new shares, at a nominal value of SAR 10 per share in favor of the seller.

The mining major’s shares will rise to 3.80 billion from 3.69 billion, representing an increase of nearly 3.01% of Maaden’s capital before the issuance of the new shares.

Post-acquisition, Maaden’s ownership in MWSPC will rise from 60% to 85%, while the seller’s direct and indirect ownership in the company’s capital will represent approximately 2.92%. The existing shareholders’ ownership will decline to 97.08% from 100%.

The 25% stake in MWSPC, in addition to the guarantor’s marketing rights under MCP/DCP product marketing agreement, and the fertilizer product marketing agreement, are valued at SAR 5.62 billion.

As of April 24, 2024, Maaden’s valuation calculated using the volume-weighted average price (VWAP) of its shares, was SAR 187.06 billion, or SAR 50.67 per share.

The share swap ratio is 0.526 new shares in Maaden for every one share in MWSPC, based on the number of shares that will be acquired in MWSPC, amounting to 210.94 million, and based on the number of new shares that will be issued in Maaden in favor of the seller.

SABIC will still own 15% of MWSPC capital after completing the acquisition deal.

Under the agreement, the seller will be subject to a lock-in period of no more than five years starting from the completion date of the acquisition transaction.

After three years from the date of completion of the acquisition, the seller will have the right to transfer or dispose of a certain number of new shares, whether directly or indirectly, without obtaining prior written approval from Maaden.

In the fifth year, the number of shares will be increased to include all new shares, in accordance with the terms and conditions of the agreement.

Maaden will announce any fundamental developments related to the acquisition deal in due course.

The mining company appointed HSBC Saudi Arabia as financial advisor for the acquisition deal, and Clifford Chance and Abuhimed Alsheikh Alhagbani Law Firm (AS&H) as legal advisors.

Maaden or the seller has the right to terminate the SPSA if the deal is not completed by April 30, 2025, or such other date as the parties may agree in writing from time to time.

The agreement can also be terminated if any of the conditions under the agreement have not been fulfilled or waived by the long stop date, or if either party materially breaches the obligations imposed on them under the agreement during the period from the signing of the agreement until the completion of the transaction.

The acquisition deal is subject to a bundle of conditions, including obtaining Tadawul's approval to list the new shares resulting from the capital increase, and the Capital Market Authority (CMA) approval on the acquisition deal and the shareholders circular.

Moreover, the deal requires obtaining the approval of the extraordinary general assembly (EGM) of Maaden in accordance with the provisions of the Companies Law, the Rules on the Offering of Securities and Continuing Obligations, and any other necessary or appropriate approvals in relation to the deal.