DOW JONES NEWSWIRES
Terra Industries Inc. (TRA) rejected a raised $2.77 billion
takeover offer from rival fertilizer maker CF Industries Holdings
Inc. (CF), further complicating a three-way takeover struggle
within the industry.
The rebuff comes just two days after CF rejected a
cash-and-stock approach initially valued at $3.6 billion from
competitor Agrium Inc. (AGU), saying it would proceed with its own
effort to acquire Terra.
The jockeying for position comes as fertilizer producers look to
take advantage of the drop in the sector's stock prices since last
summer to buy production capacity ahead of what they see as an
inevitable turnaround in commodity prices.
Prices for all three fertilizer ingredients soared last year as
farmers sought to boost crop yields and take advantage of rising
prices for corn, soybeans and wheat, only to see the boom reverse
in August.
In a letter to CF Chief Executive Stephen Wilson, Terra CEO
Michael Bennett and Chairman Henry Slack said Wednesday the
company's board unanimously concluded that CF's bid runs counter to
Terra's strategic objectives, substantially undervalues the company
and would deliver less value to shareholders than owning Terra on a
stand-alone basis.
CF couldn't immediately be reached for comment.
The company Monday raised its bid for Terra and said it would
take it directly to shareholders, offering $27.50 in stock for each
Terra share based on an exchange ratio ranging from 0.4129 to
0.4539 depending on CF's stock price. That compares with an
original ratio of 0.4235.
CF is preparing an investor roadshow and proxy battle before
Terra's annual meeting in May. CF has nominated a slate of three
alternative directors to the Terra board to promote its bid.
Terra shares have climbed sharply since CF made its move but
have remained below the offer price and traded recently at $25.12,
down 2.1%. CF gained 6.4% to $68.39 while Agrium added 5.8% to
$37.16.
Meanwhile, Agrium will launch its own exchange offer shortly for
CF shares. A combined Agrium-CF would become the world's
fourth-largest fertilizer producer, with annual sales of around $14
billion, and enhance Agrium's global presence in products based on
nitrogen, phosphate and potash.
-By Lauren Pollock, Dow Jones Newswires; 201-938-5964;
lauren.pollock@dowjones.com