CF Industries Holdings Inc. said on Feb. 23 that it has commenced an exchange offer for all of the outstanding shares of Terra Industries Inc. common stock at a fixed exchange ratio of 0.4235 CF shares for each Terra share. The company filed a prospectus/offer to exchange on Form S-4 with the U.S. Securities and Exchange Commission.
In connection with commencing its exchange offer for Terra Industries, CF sent a letter to Terra officials noting that its offer for Terra has been very well received in the market, which has seen it as compelling. The letter said Terra shares are up over 50 percent since the offer, which is over three times the percentage increase of the peer group.
CF said Terra’s goal of expanded industrial nitrogen applications would be enhanced through a combination. CF said it would welcome having a number of Terra’s board members join the board of the combined company. “It is important to us that Mike Bennett be one of those board members and that he continue to serve in a senior executive capacity,” said the letter. “Also, we would consider locating some functions of the combined company in the Sioux City area, while preserving the synergies in the transaction.”
While CF sees no reason to change the current terms of the deal, it said it was prepared to review any information Terra can provide that it believes justifies a change in terms.
CF said it was going forward with its proxy contest to replace three of the Terra directors at the upcoming annual meeting. The exchange offer is scheduled to expire on May 15, 2009, which is the last date that Terra bylaws permit it to hold its annual meeting.