CF Industries Holdings Inc. announced on Dec. 7 that it has increased its offer for Terra Industries Inc. by $4.75 in cash per share, to a total of $4.6 billion. CF is now offering to acquire Terra for $36.75 in cash and 0.1034 of a share of CF common stock for each Terra share. The offer has a value of $45.91 per share, based on CF’s closing price as of Friday, Dec. 4, 2009. The $36.75 cash portion of the offer includes the $7.50 per share dividend declared by Terra.
“We have made a compelling offer, which represents more than a 50 percent premium to what we believe would be the unaffected trading price for Terra,” said Stephen Wilson, CF chairman, president, and CEO. “It is time to sign a merger agreement and put these two great companies together.”
Terra said it would review the latest offer, but there had been no response by Friday morning, Dec. 11.
In related news, Bruce Waterman, Agrium senior vice president, finance, and chief financial officer, speaking before the Bank of America Merrill Lynch Global Industries Conference Dec. 9, said Agrium made it pretty clear to CF’s board and shareholders in its recent tender that it was a vote for the tender at Agrium’s last offer. Even so, Agrium still got 62 percent of the shares. CF argued last summer that shareholders tendered to Agrium’s offer as a way to say they wanted a higher offer. Sources told Green Markets that they still questioned whether Agrium’s last offer was really its best and final offer.
Waterman said that Agrium has concluded that it needs to be talking to a different CF board, and that is why it plans to nominate directors to that board for next spring’s shareholder meeting (GM Dec. 7, p. 1).
Agrium’s pursuit of CF has had some impact on Agrium’s buying up of more retail assets, according to Waterman. “We’ve been holding off doing a lot of that, while we’ve been pursuing CF. It’d be nice to have that settled, so we have a good idea of where we are going forward and then we’ll be a lot more aggressive in buying the retailers.” He noted that Agrium did recently buy Agriliance LLC outlets (GM Nov. 30, p. 1), because if it had not, they might have gone away.
One area for retail expansion, said Waterman, is Canada. “You’ll see us grow into Canada. We’ve got some opportunities to grow our retail into Canada and we’ll be doing that as well.”
In the meantime, Agrium said Dec. 4 that it has withdrawn and re-filed its Hart-Scott-Rodino notification in connection with its proposed acquisition of CF. As earlier announced, Agrium entered into a consent agreement with the staff of the Federal Trade Commission on Nov. 17, 2009. The agreement has been forwarded to the Commission for review and approval. Agrium said the remedies in the agreement are not material to the proposed transaction with CF.
In related news last week, Yara International ASA officials were quoted as saying the company had some interest in Terra, but not CF, and that the bidding war in the U.S. had gotten too high. “It is the job of the Yara management to consider the growth opportunities that exist in the market, and we believe consolidation in the fragmented nitrogen industry is good,” a Yara spokesman said, when asked to comment. “However, we have repeatedly said that we will not participate in a head-on bid contest in the U.S. Consolidation in North America is one of Yara’s growth opportunities, but low-cost regions have first priority. The development in [the] U.S. will be followed closely, and we will be opportunistic.”