CF Industries Holdings Inc. said Jan. 14 that it has withdrawn its offer to acquire Terra Industries Inc. and that it is no longer pursuing the acquisition. CF also said that it has sold all its Terra shares, with a net gain (including dividends) that more than offsets the expenses it has incurred in connection with its proposed acquisition of Terra.
“It is clear that an acquisition of Terra now would require a significant increase in our offer, given the substantial uplift in equity values in the fertilizer sector,” said Stephen Wilson, CF chairman, president, and CEO. “While the strategic merits of a transaction are undeniable, it is not in the best interests of CF Industries stockholders to increase our offer to the level that we believe now would be required for Terra to agree to an acquisition. We are, of course, pleased that prospects for nitrogen and phosphate fertilizers have improved in the view of investors, a view we share.”
CF also said that in light of its current capitalization and expected strong cash flow in 2010, it will continue, as it has in the past, to evaluate its full range of capital deployment opportunities, including strategic investments and returning capital to stockholders.
CF told Green Markets that the decision to exit the race for Terra in no way indicates it is now receptive to an offer from Agrium Inc. “Agrium has made an offer that was very far from compelling when we rejected it, and value expectations in the market have only gone up since then,” said Terry Huch, CF spokesman. Agrium partisans have argued that CF had earlier indicated that it would entertain an offer of $100 per share and that Agrium’s offer now far exceeds that amount. However, as noted by Huch, values for the fertilizer sector have gone up considerably since those indications were made.
Also on Jan. 14, Agrium reiterated that it has notified CF that Agrium will nominate two independent and highly qualified directors for election to CF’s board of directors at CF’s 2010 annual meeting of stockholders. Agrium also notified CF that it intends to seek CF stockholder approval for a resolution requesting that the CF board redeem CF’s poison pill.
“We remain fully committed to acquiring CF and believe the CF board of directors has failed to uphold its stockholders’ interests by continuing to ignore Agrium’s strategically and financially compelling offer, currently valued at $110.32 per CF share,” said Mike Wilson, Agrium’s president and CEO. “We believe CF stockholders are entitled to the opportunity to benefit from our offer, which they have consistently supported. Accordingly, we are nominating two highly qualified, independent individuals with extensive fertilizer industry experience in an effort to bring objectivity to CF’s board.”
Agrium has now identified its two nominees for the CF board. They are L. Kenny Cordell, former chairman and CEO of United Agri Products, and a former senior executive in agricultural chemicals at Rohm & Haas, BASF, and FMC; and Michael E. Ducey, current director and chairman of the audit committee of Verso Paper Holdings Corp., current non-executive chairman of the board of Texas Petrochemical Inc., and former director of United Agri Products.
Agrium says it has notified CF in accordance with CF’s bylaws, although CF’s 2010 annual meeting has not yet been scheduled.
Agrium also announced that it has extended the expiration date of its offer to acquire CF for $45.00 in cash plus one Agrium share per CF share until 12:00 midnight, New York City time, on Feb. 22, 2010. As of 5:00 p.m., New York City time, on Jan. 13, 2010, approximately 13.8 million shares of CF’s outstanding common stock had been tendered into and not withdrawn from the exchange offer.