CF Industries Holdings Inc. said late on May 15 that its board of directors has rejected Agrium Inc.’s latest revised offer to acquire all outstanding shares of CF Industries. Following a review of Agrium’s latest revised offer with management and its legal and financial advisors, the CF board concluded that the offer continues to substantially undervalue CF and is not in the best interest of CF stockholders.
Agrium’s latest revision to its offer added $5.00 in cash per share, which CF says is only $0.58 above the $4.42 per share increase in CF’s cash position during the first quarter of this year. CF noted that since Feb. 24, 2009, the day before Agrium made its initial offer, the overall stock market is up significantly, and there has been an increase of 36.9 percent in the average stock price for the peer group. With the latest revised offer, the nominal value of Agrium’s offer has increased by only 22.5 percent since it was first made, said CF.
“Our board and management team are committed to providing superior value to our stockholders,” said Stephen Wilson, CF chairman, president and CEO. “Agrium has not significantly changed the terms of its offer since it was first made and the board believes that the offer continues to substantially undervalue CF Industries. The board concluded that the continued execution of its strategic plan, including the company’s proposed business combination with Terra Industries, will deliver superior value to CF Industries stockholders.”
Agrium responded to CF’s latest rejection on Monday, May 18.
“The inescapable fact is that Agrium’s offer, which provides a premium of nearly 60 percent to CF’s share price on the day prior to our initial offer, delivers more value to CF stockholders than any of the strategic alternatives articulated by CF, including remaining independent or acquiring Terra Industries,” said Agrium President and CEO Mike Wilson. “CF’s unsupported assertions to the contrary do not change this reality. The fact that CF will not engage with us reinforces our belief that, left on its own, CF will not act in the best interests of its stockholders. It’s now up to CF stockholders to protect their own interests by demanding that CF come to the table to negotiate a mutually beneficial merger agreement with Agrium.”
Agrium’s Wilson said that the company has tried to talk with CF management, with no success. “?ǪWe didn’t call because we didn’t think we’d get our calls returned,” said Wilson, speaking May 14 at the BMO Capital Markets 2009 Agriculture, Protein and Fertilizer Conference. “We’re now calling and the calls are getting returned saying we don’t want to talk to you. So, you know, that’s behind us.”
As to why Agrium did not put forth a slate of candidates for the CF board at CF’s recent shareholders meeting, Wilson said that at the time to nominate the slate, Agrium did not have its financing in place. He said the company moved on CF once it got the financing.
Regarding suggestions that Agrium is simply trying to mess up CF’s proposal to acquire Terra Industries Inc., Wilson said “We have very good value on the table. We’re determined. We’re committed.” He said the company doesn’t hire bankers and line up $1.4 billion in financing for nothing. “We don’t go to all this effort just to entertain ourselves.”