Mosaic, the world's top producer of concentrated phosphate, has entered talks to buy Vale's fertilizer unit, in a renewed push to grow in South America and Africa, three sources with direct knowledge of the matter said.
Although both companies are discussing what structure would best suit their interests, the first source said a cash-and-stock deal remains the favorite option at this point.
The same source, who requested anonymity because talks are under way, said the value of Vale's fertilizer assets could reach $3 billion.
Mosaic and Vale are also discussing other alternatives for the deal, the other two sources said, without elaborating.
Under terms of the first option, Rio de Janeiro-based Vale would become Mosaic's biggest shareholder, with a stake between 12 and 15 percent depending on the size of the deal's stock portion, the first source said.