Norway's Yara Says It Won't Raise Terra Bid; Shares Rise
12 March 2010 - 8:35PM
Dow Jones News
Norway's Yara International ASA (YAR.OS) Friday said it won't
raise its $4.1 billion bid for U.S. fertilizer producer Terra
Industries Inc. (TRA), which was trumped last week by CF Industries
Holdings Inc. (CF).
The news gave a boost to Yara's shares. At 0849 GMT, they traded
up 5.7% at 252.90 Norwegian kroner ($43.30). Yara's shares have
risen 71% in the past 12 months, underperforming the 78% gain in
the wider Oslo market.
"This is obviously positive news," an Oslo-based analyst said,
adding that investors had started to anticipate that Yara would
walk away.
Wednesday, Yara said it had received a notification from Terra
saying that the proposal from CF is, in Terra's view, "a superior
proposal to the merger agreement signed by Yara and Terra."
The merger agreement can be terminated under certain
circumstances. Yara would be entitled to a $123 million breakup
fee.
Jorgen Ole Haslestad, president and chief executive of Yara,
which is already one of the world's largest fertilizer producers,
Friday said that Terra would be "a perfect fit to Yara," and
attractive at Yara's proposed valuation.
"But we will not increase our offer that was first accepted by
the Terra board," Haslestad said.
Rising commodity prices have sparked a flurry of deals in the
crop-nutrient sector lately. Terra's focus on nitrogen-based
products has kept it among the most attractive operators, as it's
prized as a U.S. focused pure-play on nitrogen-based products with
an expanding industrial unit complementing its agribusiness
interests.
CF Industries' offer for Terra is worth $4.72 billion, compared
with Yara's all-cash $4.1 billion bid in February.
Terra had already fought a yearlong pursuit from U.S. rival CF
Industries before accepting Yara's bid last month. CF Industries is
still defending itself against a hostile approach from Canada's
Agrium Inc. (AGU).
The global fertilizer market is recovering from a two-year
boom-and-bust, triggering a series of efforts to tap improving
supply and demand conditions. Nitrogen prices have been far more
resilient than those for phosphate and potash, which are also used
to produce crop nutrients.
-By Karl Bruze, Dow Jones Newswires; 46 8 545 130 95;
karl.bruze@dowjones.com