Bunge Ltd. (BG), a leading integrated global agribusiness and food company in the U.S., is currently engaged in discussions with Vale S.A. (VALE), a diversified metals and mining company, to sell its fertilizer business in Brazil Incorporatedluding its 42.3% stake in fertilizer company Fosfertil.

The deal valued at $3.8 billion would be Vale’s biggest acquisition since its $18.2 billion takeover of Inco Limited, a nickel producing company in Canada, in 2006. Vale is the largest producer and exporter of iron ore across the globe. Of late, the company has been eyeing the fertilizer business as part of a strategy to benefit from rising fertilizer demand due to increased global food consumption and agriculture output in South America and Asia.

Fosfertil is a major provider of raw materials for fertilizer producers and mixers in Brazil, and plays an integral part in the country’s agricultural sector. If the deal materializes, Vale would gain a strategic advantage in the fertilizer business of the country. On the other hand, Bunge’s potential exit has probably stemmed from the government’s move to reform the country’s mining regulations to increase federal taxes and royalties from the sector and stimulate domestic fertilizer production.

Headquartered in White Plains, New York, Bunge supplies fertilizer to farmers in South America; originates transports and processes oilseeds, grains and other agricultural commodities worldwide; produces food products for commercial customers, and supplies raw materials and services to the bio-fuels industry. Bunge produces leading consumer vegetable oil, margarine and mayonnaise brands in South America, Europe and Asia, as well as a wide range of quality milled corn and wheat products in the Americas.

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