The intensity continued to heighten last week in the merger race involving Agrium Inc., CF Industries Holdings, Inc., and Terra Industries Inc. as the Terra shareholders get ready to meet Friday, Nov. 20. For that meeting, CF, which now owns at least 7 percent of Terra, has put forth three candidates for the Terra board.
On Nov. 11, Terra said that two of the nation’s leading independent proxy advisory firms – PROXY Governance Inc. and Egan-Jones Proxy Services – are recommending that Terra shareholders vote on Nov. 20 for the three Terra-designated directors – Martha Hesse, Dennis McGlone, and Chairman Henry Slack.
“We are pleased that PROXY Governance and Egan-Jones have separately indicated their support for the re-election of all three Terra directors,” said Terra President and CEO Michael Bennett. “PROXY Governance and Egan-Jones’ recommendations reinforce our strong belief that Terra’s board of directors, which has returned more than $1 billion in value to shareholders over the past four years, is best suited to continue executing on our focused and prudent strategy and driving shareholder value.”
Bennett reiterated that CF’s latest proposal is inadequate and opportunistic and not in the best interests of Terra shareholders. “We strongly believe that CF’s nominees, if elected to Terra’s board, would work to advance CF’s inadequate proposal and CF’s self-serving interests at the expense of all other Terra shareholders.”
In a Nov. 9 letter to Terra shareholders, CF said it is not seeking control of the Terra board at the upcoming meeting, but is seeking to elect three nominees who are committed only to act in the best interest of Terra shareholders. CF reiterated that it is offering a significant premium for Terra shares ?Çô 40 percent above what it believes would be the price of Terra absent takeover speculation. It said the strategic benefit of the combination is undeniable, and that the combined company would provide a strong financial platform to pursue growth.
In other news last week, in a Nov. 12 letter to CF shareholders, Agrium said that after nine months, it was time for CF to listen to shareholders. Agrium reiterated that its latest offer, which it valued at $97.47 per share, is its best and final offer for CF. CF had earlier indicated that a bid of $100 per share might get it to the table.
Agrium’s offer is $45.00 cash and one common share of Agrium for each CF share, for a total consideration of $4.9 billion, based on Agrium’s closing stock price of $52.47 on Nov. 11. Agrium said its revised offer represents a premium of over 75 percent to CF’s closing price of $44.85 on Feb. 24, 2009, the day before Agrium announced its initial proposal. Agrium said it is offering a far higher multiple than CF has ever traded, that CF’s unaffected share price is far below Agrium’s offer and even current trading levels, and that CF/Agrium is a better combination than CF/Terra across all criteria, with greater EBITDA and a more diversified revenue stream with less exposure to volatile commodities.