Agrium seeks to acquire CF Industries for $3.6 billion

By Lisa Kerner

Charlotte, N.C., Feb. 25 - Agrium Inc. wants to acquire all of the capital stock of CF Industries Holdings, Inc. 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, according to a Feb. 25 letter from Agrium to CF Industries' board of directors. The letter was included in a news release.

Approximately 56% of the total consideration would be in Agrium common shares, and the remaining 44% would be in cash.

Agrium said 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 acquisition.

The offer price is a 30% premium over CF Industries' closing price on Feb. 24 and a 42% premium over the 30-day volume-weighted average share price.

Agrium said its proposal is conditioned upon CF Industries' termination of its $2.1 billion exchange offer for Terra Industries Inc. that began on Monday.

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

CF Industries' board of directors will evaluate Agrium's proposal and make a determination "in due course," the company said.

"We look forward to engaging with CF's board of directors to quickly reach a negotiated agreement," Agrium president and chief executive officer Mike Wilson said in the letter.

"We anticipate annual operating synergies from the combination will be approximately $150 million, substantially in excess of those contemplated in CF's proposal to acquire Terra, and your stockholders will share in the value of those synergies through their continued ownership of the combined company."

Agrium, a Calgary, Alta., fertilizer company, is being advised by RBC Capital Markets and Scotia Capital.

Morgan Stanley and Rothschild are acting as financial advisers to CF Industries.

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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