The quick-paced actions of the three fertilizer industry merger parties – Agrium Inc., CF Industries Holdings Inc., and Terra Industries Inc. (the “triad,” as one player referred to them) – were difficult to keep up with as they rapidly shot letters back and forth last week. CF’s impending April 21 shareholder meeting helped heighten the intensity.
Agrium Inc., in an April 15 letter to CF shareholders, urged them to vote the green proxy card and withhold votes for the three CF director nominees. Agrium stressed that it is fully committed to acquiring CF, and that CF in turn is trying to buy Terra Industries Inc. at a premium without allowing CF shareholders the opportunity to vote.
CF quickly responded to Agrium on April 15, and in a possible nod to prom season said that if Agrium really cared about buying CF, it would have called or contacted CF. “We believe that Agrium is more interested in interfering with our business combination with Terra Industries, than in acquiring CF Industries at anything other than a bargain price,” said CF Chairman, President and CEO Stephen Wilson. “If Agrium were serious about acquiring CF Industries, it would have made a credible offer. If Agrium were serious about acquiring CF Industries, it would have at least tried to engage with us. The fact is that Agrium and its financial advisors have not contacted or attempted to contact CF Industries in well over a month. The CEO of Agrium called on March 6, 2009, to ask if we needed additional information and he has not called since then.”
Wilson added that CF’s stock has been the best performing stock in its peer group ?Çô Agrium is by far the worst performing stock. Wilson said Agrium’s offer is grossly inadequate and nothing Agrium says changes that.
On April 16, Agrium President and CEO Michael Wilson responded to CF saying it was 100 percent committed to acquiring CF. “CF has repeatedly alleged that Agrium is not serious about acquiring CF and that we made our offer in an attempt to interfere with CF’s proposed acquisition of Terra,” said Michael Wilson. “Let me assure both you and the CF stockholders that nothing could be further from the truth. To avoid any future confusion on your part, Agrium is 100 percent committed to acquiring CF. Our offer represented a premium of over 30 percent on the date it was announced and we have since raised the cash component of our offer by 10 percent. Furthermore, we have repeatedly indicated our willingness to pay more if CF would only meet with us and demonstrate additional value.
“Given this context, I was quite surprised by your recent letter to Terra questioning why Terra is not interested in ‘negotiating a merger agreement’ with CF, and stating that you do not understand Terra’s ‘reluctance to explore’ a deal with CF. Based on unaffected stock prices, Agrium is offering a multiple for CF that is 37 percent greater than that proposed by CF for Terra. How can you on the one hand, question why Terra won’t engage in merger discussions with CF, while on the other hand, you refuse even to discuss our higher premium offer?
“We fail to understand how your stated ‘commitment to stockholder value’ is consistent with this blanket refusal or with your decision to restructure your offer for Terra to eliminate a CF stockholder vote.
“Contrary to your assertions, and as you well know, we have attempted to engage you and your board in discussions and each time we were rebuffed or ignored.
“Again, to be abundantly clear, we reiterate that the full Agrium team and our advisors remain ready to meet with you and your advisors immediately – and at a location of your choice – to negotiate a mutually beneficial transaction between our two companies.”
There was also Agrium/CF back-and-forth over the advice of proxy advisory firms. On April 13, CF touted that RiskMetrics Groups ISS Governance Services (RMG) was in support of CF shareholders voting for its three board members April 21, as was KPMG LLP, CF’s independent accounting firm. Ironically, Agrium had earlier quoted RiskMetrics itself for having called CF’s decision to restructure the Terra offer to avoid a shareholder vote as “somewhat absurd.” On April 16, CF reported that it had also lined up Proxy Governance Inc. in support of its three board members and accounting firm.
With all these Agrium CF goings on, Terra was not to be left out. On April 14, CF sent a letter to Terra noting that Terra had bought 100 shares of CF stock and was demanding CF provide Terra with a list of shareholders. It also noted that Terra was supposed to call a shareholders meeting by May 15. CF is trying to put three of its candidates on Terra’s board.
Terra’s board, however, turned the tables on CF, changing the company’s bylaws so that it no longer had to call a meeting between April 15-May 15. According to a filing with the Securities Exchange Commission, on April 13, the board adopted new bylaws that the meeting is to be held on such a day as shall be designated by the board. The board said it believes the status of the Agrium offer for CF will be a significant factor to be considered by Terra shareholders at the next annual meeting. It said the change allows flexibility so shareholders will have the benefit of all relevant information at the time of the meeting.