Cargill, the agricultural giant, said Tuesday that it would merge its fertilizer business with IMC Global, a publicly traded company, to create one of the world's largest fertilizer companies.
Cargill will control two-thirds of the new company, and shareholders of IMC will have stock in the other third, assuming the deal gets shareholder and regulatory approval.
For Cargill, the nation's largest private company, the move is the first in its 139-year history aimed at creating a public company.
But officials at Cargill, which produces, processes and transports a variety of agricultural products, say they are not testing the waters for a larger public offering of stock.
The company has nearly 100,000 employees and reported revenue of more than $59 billion last year. But the founding families who still control it, the Cargills and the MacMillans, have long resisted selling shares to the public.
"Cargill doesn't have any intention of going public,'' said Robert L. Lumpkins, the vice chairman and chief financial officer at Cargill, which is based in Minnetonka, Minn.
Cargill and IMC executives said Tuesday that IMC officials pushed to keep the new company public primarily so that IMC's own shareholders could take advantage of an expected turnaround in the company's fortunes, if fertilizer prices rebound from a multiyear slump.
Shares of IMC Global rose $1.39, or 13.4 percent, to $11.74 Tuesday.
Wall Street analysts who follow IMC applauded the deal Tuesday, citing expected cost savings and the benefits of the Cargill fertilizer division's balance sheet and global transportation network.
"This is an industry that's really struggled in the last few years, so to get real cost savings, you've got to merge, said Richard O'Reilly, an analyst at Standard & Poor's. ''
Executives at IMC, which is based in Lake Forest, Ill., said the new company would have about $4.1 billion in revenue and become the world's dominant producer of phosphate and potassium fertilizer.
The new company would control a huge share of phosphate fertilizer production in the United States.
Each company had about $2 billion in revenue in the last year and they both have major phosphate production operations in Florida.
"This gives significant leverage to our phosphate business,'' said Douglas A. Pertz, the chairman and chief executive of IMC. "The phosphate business has been in a downturn since '99, but we're starting to see a recovery.''
The companies also have large potassium production operations.
Company officials said they expected huge cost savings in the coming years, as much as $145 million a year by the end of the third year of operation. Executives at the two fertilizer operations, which together have about 8,000 employees, predict there will be large job cuts because many of their operations overlap.
Company officials also say that while IMC has been suffering from a large debt load, about $2 billion at the moment, Cargill's fertilizer division has a strong balance sheet and would add just $50 million worth of debt to the new company.New York Times/David Barboza
