Investors back CF snub; protests unlikely to sway Cisco; upswing in insurance deals expected

By Cristal Cody

Tupelo, Miss., Nov. 4 - Shareholders support Terra Industries Inc.'s rejection on Wednesday of the latest proposal from CF Industries Holdings, Inc., which is fighting off its own takeover offer from Agrium Inc., an analyst told Prospect News.

Also on Wednesday, Cisco Systems, Inc. received more opposition to its plans to buy out Norwegian video conferencing company Tandberg ASA for $3 billion, but an analyst said the protests are unlikely to sway Cisco this early in the game.

In other situations, some investors remain unconvinced with chairman Harold Hamm's latest buyout offers for Hiland Partners, LP and Hiland Holdings GP, LP, an analyst said in an interview on Wednesday.

Meanwhile, mergers and acquisitions in the insurance sector are expected to pick up, one analyst told Prospect News on Wednesday.

"M&A may heat up in the insurance industry in the coming quarters as these stocks trade so cheap on a price-to-book basis," the analyst said.

On Wall Street, investors fed a late sell-off that left stocks mixed on Wednesday.

The Dow Jones Industrial Average closed up 30.23 points, or 0.31%, at 9,802.14.

The Standard & Poor's 500 index rose 1.09 points, or 0.10%, to 1,046.50, while the Nasdaq Composite index slipped 1.80 points, or 0.09%, to 2,055.52.

Terra issues quick deal rejection

Terra said in a statement released to Prospect News on Wednesday that CF's new offer of $32.00 a share in cash and 0.1034 of a share of CF for each share of Terra is "inadequate, opportunistic and not in the best interests of Terra and its shareholders."

Sioux City, Iowa-based Terra, a leading North American producer and marketer of nitrogen products for the fertilizer industry, reported 2008 revenues of $2.9 billion.

CF raised its offer on Sunday from an earlier all-stock bid of 0.465 of a share of CF for each share of Terra. The new bid values Terra at $40.61 a share.

Deerfield, Ill.-based CF responded in a statement on Wednesday that it made a "full, fair and compelling offer, which provides Terra stockholders with certainty of value and closing. CF Industries is confident that Terra stockholders will show their support for its offer by voting for CF Industries' three highly qualified, independent nominees at Terra's annual meeting on Nov. 20."

Terra's board chairman, Henry R. Slack, said the company remains open to considering any "bona fide" offers.

An analyst told Prospect News that "shareholders don't think this is the best deal right now. Agrium has a bid for CF itself."

Agrium has a tender offer open through Nov. 13 for CF shares at $40.00 in cash plus one Agrium share per CF share.

Also on Wednesday, Calgary, Alta.-based Agrium reported that third-quarter earnings fell to C$26 million, or 16 cents a share, in the quarter ended Sept. 30, compared with C$367 million, or C$2.31 a share, in the same period a year ago.

Sales fell to C$1.89 billion in the quarter from C$3.18 billion a year earlier.

Agrium has been seen by analysts as the deal-breaker in the battle between CF and Terra with expectations that the agricultural company would make another bid for CF.

In the earnings release, Agrium said Wednesday that it remains "fully committed to acquiring CF and intends to continue to press the board of directors of CF to execute a mutually beneficial merger agreement for our respective shareholders. Agrium is prepared to increase its offer further if CF can demonstrate additional value."

Terra shares gained 66 cents, or 1.89%, to close at $35.54, while CF's stock added 96 cents, or 1.12%, to $86.39.

Agrium's U.S.-listed shares fell 2 cents, or 0.04%, to $47.99.

Protests mount against Cisco

OppenheimerFunds, Inc., as investment adviser on behalf of funds and accounts holding 5.78% of Tandberg's outstanding shares, said in a statement sent to Prospect News that it does not plan to vote for Cisco's offer of 153.50 Norwegian kroner a share.

"The current tender offer proposed by Cisco undervalues the longer term opportunity set for Tandberg ASA both as an independent entity and a merged one," OppenheimerFunds said.

Another shareholder group that represents 24% of Tandberg shares also has rejected San Jose, Calif.-based Cisco's bid made in October.

Tandberg's board of directors has approved the offer, which also must be accepted by 90% of shareholders.

Emiliano Leggieri, an analyst with Pali International Ltd., said in a research note released Wednesday that Cisco likely will "play hardball" with negotiations.

"We struggle to see the incentive for Cisco in meeting the expectations of dissenting shareholders early in the offer period," he said. "We would not attach too much relevance to the talks of Cisco walking if it does not reach 90%, or indeed comments made by the company itself about its fiscal prudence, as we feel this is a reaction to the war of words launched by dissident Tandberg holders."

Tandberg shares slipped 0.13% to Kr 150.20.

Cisco's stock edged up 38 cents, or 1.66%, to $23.29 on Wednesday.

Hiland investors take more time

Hiland Partners and Hiland Holdings on Tuesday again postponed shareholder meetings to decide on Hamm's newest offer to take the companies private.

Shareholders now will vote on Dec. 4 on the bids of $10.00 a unit, up from a previous bid of $7.75 a unit, for Hiland Partners and $3.20 a unit, up from an earlier offer of $2.40 a unit, for Hiland Holdings.

The deals must be approved by a majority of unitholders.

Independent board member committees of the Enid, Okla.-based natural gas companies have determined the offers from Hamm, who is chairman of the general partners of both companies, are fair.

An analyst Prospect News spoke with on Wednesday said concerns with the proposals remain.

"There's no one person or group that's driving this," the analyst said. "It's a question of what all unitholders expect in terms of value. Obviously, they were not voting their units when the bid was at $7.75. I would think at $10.00, that may still prove to be difficult."

Units in Hiland Partners rose 1 cent, or 0.10%, to $9.83. Units have traded as low as $3.64 and as high as $27.43 in the past year.

Units of Hiland Holdings closed up 1 cent, or 0.32%, at $3.15. The units have traded from $1.55 to $12.15 over the past year.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Cisco Systems, Inc. Nasdaq: CSCO

Hiland Holdings GP, LP Nasdaq: HPGP

Hiland Partners, LP Nasdaq: HLND

Tandberg ASA Oslo: TAA

Terra Industries Inc. NYSE: TRA

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