CF Industries rebuffs revised Agrium offer

By Susanna Moon

Chicago, March 30 - CF Industries Holdings, Inc. said its board of directors recommended that stockholders reject Agrium Inc.'s revised offer to acquire all outstanding shares of CF Industries.

The company's board concluded that Agrium's increased offer price is "grossly inadequate, substantially undervalues CF Industries and is not in the best interests of CF Industries and its stockholders," according to a company press release.

"We strongly believe that continuing to pursue our long-term strategy, including our proposed business combination with Terra Industries [Inc.], is the best way to do so," Stephen R. Wilson, chairman, president and chief executive officer of CF Industries, said in the release.

"We are confident that both our stockholders and Terra's stockholders support our proposed business combination. We believe the Terra stockholders will show their support by voting for our proposed slate of directors at Terra's annual meeting, which is required to be held by May 15 under the Terra bylaws."

Morgan Stanley and Rothschild are financial advisers to CF Industries, and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel.

Agrium lifts offer

On March 27, Agrium said it is offering CF Industries shareholders $35.00 in cash, up 10.4%, as well as one common share of Agrium for each CF Industries share.

Based on Agrium's closing stock price on March 26, the increased offer represented a premium of 35% to CF Industries' closing price on Feb. 24, the day before Agrium announced its initial proposal, and of 48% to the 30-day volume-weighted average price through that date.

Agrium also said it filed preliminary proxy materials with the Securities and Exchange Commission urging CF Industries stockholders to withhold all votes in connection with the election of the three nominees to the CF Industries board of directors at the company's 2009 annual meeting.

Agrium exchange offer

On March 16, Agrium said it began its exchange offer for CF Industries after CF Industries refused to enter into discussions.

Under Agrium's original offer, CF Industries stockholders would have received $31.70 in cash and one common share of Agrium for each CF Industries share.

CF Industries stockholders were also given the option of electing to receive either 1.7866 common shares of Agrium or $72.00 in cash, subject to proration, for each CF Industries share held.

Agrium said not more than 44% of the shares tendered will be exchanged for cash and not more than 56% of the shares tendered will be exchanged for Agrium common shares.

The exchange offer will expire at midnight ET on May 19.

According to Agrium, it has sufficient cash resources and committed financing underwritten by Royal Bank of Canada and the Bank of Nova Scotia to fund the cash portion of the offer.

RBC Capital Markets is acting as dealer manager, and Georgeson Inc. is the information agent in connection with the offer.

CF pursues Terra

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

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

As previously reported, CF Industries said it 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.

Terra had rejected CF Industries' offer of a fixed exchange ratio of 0.4235 of a CF Industries share for each Terra share. The Sioux City, Iowa, nitrogen products company also rejected CF Industries' unsolicited offer in January.

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

CF Industries filed preliminary proxy materials with the Securities and Exchange Commission to nominate three independent directors to replace members of Terra's board of directors at Terra's 2009 annual stockholders meeting.

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

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Terra Industries Inc. NYSE: TRA

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