Cargill Trusts Uses Mosaic S&P 500 News To Sell More Shares (MOS)

The Mosaic Company (NYSE: MOS) might have been indicated higher on the news that it was going to be added to the S&P 500 Index, but news of yet another share sale is capping those gains.  The company intends to sell 18 million more shares of its common stock on behalf of the Margaret A. Cargill Trusts.  This is on top of the huge 115 million shares sold earlier this year by the related trust.

Standard & Poor’s will add Mosaic’s common stock to the S&P 500 index after the close of trading on September 23, 2011. The S&P 500 requires that companies have a public float of more than 50% of the company and it was the prior share sale of 115 million shares that accomplished this.

J.P. Morgan Securities and UBS Securities are the joint book-runners for the offering and the trust will also allow for up to 2.7 million more shares as the underwriter’s overallotment option.

The nature of expanding the float is often considered dilutive, although these shares already exist.  Technically it is not dilutive, but it does effectively create more public shares in the float that the public and that institutions have to absorb.

Mosaic shares are indicated down 3.1% at $61.60 this morning on the news and the 52-week trading range is $55.70 to $89.24.

JON C. OGG