CF Industries rejects Agrium offer, ups bid for Terra Industries

By Lisa Kerner

Charlotte, N.C., March 9 - CF Industries Holdings, Inc.'s board of directors rejected Agrium Inc.'s offer to acquire the company and reaffirmed its intention to move forward with a business combination with Terra Industries Inc.

As previously reported, Agrium wants to acquire all of the capital stock of CF Industries in a cash-and-stock deal valued at approximately $3.6 billion. Shareholders would receive one Agrium common share and $31.70 per CF Industries share for a total value of approximately $72.00 per CF Industries share.

Agrium, a Calgary, Alta., fertilizer company, conditioned its proposal upon CF Industries' termination of its exchange offer for Terra.

In a March 9 letter to Agrium's board, CF Industries called the company's proposal "opportunistic" and "grossly inadequate."

"We are deeply disappointed that CF's board of directors has rejected Agrium's proposal without even attempting to engage us in exploratory discussions," Mike Wilson, Agrium president and chief executive officer, said in a company statement.

CF Industries said it is prepared to enter into a negotiated merger agreement with Terra.

"Specifically, CF Industries would agree to an exchange ratio based on $27.50 for each Terra share, with an exchange ratio of not less than 0.4129 of a CF Industries share and not more than 0.4539 of a CF Industries share," CF Industries chairman, president and CEO Stephen R. Wilson said in a March 9 letter to Terra.

Terra previously reject CF Industries' offer of a fixed exchange ratio of 0.4235 CF Industries shares for each Terra share. The company doubted that CF Industries stockholders would approve a transaction with Terra with Agrium's offer on the table.

As a result, CF Industries said it would structure the transaction so that a vote by CF Industries stockholders would not be necessary.

"It appears that CF Industries' board and management concluded that CF Industries' stockholders would choose Agrium's offer over CF Industries' proposed Terra acquisition and, as a result, decided to use an unusual non-voting security to deny their own stockholders a voice in this critical decision," Agrium's Wilson said.

Terra, a Sioux City, Iowa, nitrogen products company, also rejected CF Industries' unsolicited offer in January.

Deerfield, Ill.-based CF Industries Holdings is the holding company for CF Industries, Inc., a producer and distributor of nitrogen and phosphate fertilizer products.

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