Mosaic trumpeted an enhanced competitive position and potential fillips to its share price as the fertilizer giant was - in a move worth more well over $20bn - set on the path to independence by its controlling shareholder, Cargill.

However, investors remained unconvinced, sending Mosaic shares down more than 10% in New York, cutting the value of Cargill's stake by $2.5bn.

Cargill said that it was, following pressure from some of its own investors, to spin-off its 64% stake in Mosaic, through a complex deal which heralds the formation of different classes of equity, swaps of shares for debt, and public stock offerings.

Mosaic, the world's top phosphate group and a major potash producer, said it would emerge from the process, which is scheduled to last more than two years, a "fully independent company… better positioned to capitalise on the positive outlook" for the fertilizer sector.

"The transaction will give us more of a free hand to create long-term value for shareholders, and increase our flexibility to pursue our strategic and financial goals," Jim Prokopanko, the Mosaic chief executive, said.

"This transaction will bring significant benefits to our company and shareholders."

Share implications

The advantages included a number of technical fillips to Mosaic stock, with the release of most of Cargill's 286m shares onto the open market over the course of the process enhancing their liquidity, and so their attractions to many fund managers.

Furthermore, Mosaic stock would be become eligible for more stock market indices, such as the S&P500, also a shift which could encourage buying.

Many analysts also cited an increased possibility of the group, freed of a controlling shareholder, becoming a takeover target, amid the wave of deals in fertilizer, especially in the potash sector.

The spate of ongoing tie-ups includes the merger of Russia's top-two potash groups, Silvinit and Uralkali, while Germany's K+S on Wednesday revealed it had purchased 81% of Canada-based Potash One.

However, any deal would risk negating a position agreed with US authorities under which the spin-off is "expected to be tax-free to Cargill, Mosaic and their respective shareholders".

Who gets what 

The spin-off follows pressure from charitable trusts formed after the death of Margaret Cargill, granddaughter of the agribusiness group's founder William Cargill, for a way of monetising Cargill shares.

Under the deal, the charitable trusts will, in lieu of Cargill stock, receive 110m Mosaic shares, equivalent to a 25% stake, although they will not be permitted to sell the bulk of these for more than two years.

A further 107m shares, equivalent to a 24% Mosaic holding, will be swapped for Cargill debt, which as of August totalled $16.1bn, with the fertilizer group's own consolidated in.

Cargill said this move would "enhance its credit profile", at a time when it is absorbing a series of acquisitions, including AWB's grain handling business in Australia, and undertaking a programme of upgrades to US elevators.

The deal will leave 69m shares in the hands of core Cargill shareholders, equivalent to a 15.4% stake, although this so-called "B" stock will be granted enhanced voting rights over directors' appointments to ensure Mosaic control until the spin-off is completed.

"Following the completion of the transaction, Mosaic's board may consider submitting a proposal to a shareholder vote to convert the Class B stock with special voting rights into regular voting stock," the companies said in a joint statement.

Mosaic shares tumbled 10.5% to close at $76.15 in New York.