Terra bid moot on Agrium's offer for CF Industries; Senate comments continue for Live Nation merger

By Cristal Cody

Tupelo, Miss., Feb. 25 - Canadian agricultural product supplier and producer Agrium Inc. made a surprise bid on Wednesday to swallow up Deerfield, Ill.-based CF Industries Holdings Inc. for $72.00 a share in cash and stock.

The bid wipes out any hopes of completion of CF Industries' attempt to acquire Terra Industries Inc., an analyst told Prospect News.

Testimony before the Senate Judiciary Committee's antitrust subcommittee may result in additional regulatory recommendations for the merger of Live Nation, Inc. and Ticketmaster Entertainment, Inc., according to information released to Prospect News.

Also on Wednesday, a market source said Tokyo-based pharmaceutical manufacturer Astellas Pharma Inc. is unlikely to start a hostile bid for U.S.-based CV Therapeutics Inc.

Meanwhile on Wall Street, the Dow Jones Industrial Average lost 80.05 points, or 1.09%, to close at 7,270.89.

The broader indexes also fell. The Standard & Poor's 500 index dropped 8.24 points, or 1.07%, to 764.90, and the Nasdaq Composite index shed 16.40 points, or 1.14%, to close at 1,425.43.

Bigger fish kills Terra bid

Agrium investors didn't take its bid for CF Industries kindly and sent the company's shares down $3.73, or 9.26%, to close Wednesday at $36.57.

CF Industries investors, on the other hand, were thrilled and sent shares up $6.19, or 11.14%, to close at $61.77. CF Industries' stock has traded from $37.71 to $172.99 over the past year.

The offer represents a 30% premium over Tuesday's closing stock price.

Agrium's offer is valued at $3.6 billion and includes $31.70 in cash and one share of Agrium for each share of CF Industries.

However, executives said Wednesday on the investors conference call that shareholders could take a varying portion of stock and cash, depending on the response.

"Our offer allows CF stockholders to receive a substantial price rather than CF paying a premium to acquire Terra," Michael Wilson, president and chief executive officer of Agrium, said on the call.

Agrium's proposal is conditioned on CF Industries' termination of its bid for Terra.

CF Industries said in a statement on Wednesday that the board will evaluate the offer from Agrium, which is based in Calgary, Alta.

The company launched its hostile tender offer for Sioux City, Iowa-based Terra on Monday for 0.4235 of a share of CF Industries for each Terra share.

CF Industries also has a proxy contest underway to replace three of Terra's board directors.

Terra's board rejected the offer in January but said this week it will re-evaluate the bid.

"At this point, no one is expecting the Terra deal to get done," an analyst said Wednesday. "I can't imagine they would have that kind of support with a prevailing bid for the parent company. CF shareholders are going to have to choose which one is the bigger beauty contest. What's going to happen over the next few weeks is a plethora of presentations from the two management teams on what they think they can do better."

Wilson said he does not expect any regulatory hurdles in the acquisition of CF Industries.

CF Industries is a major producer and distributor of nitrogen and phosphate fertilizer products.

Agrium first tried to acquire the company prior to CF Industries' initial public offering in 2005.

"While we would have preferred to approach you privately, we concluded that given your recent unsolicited proposal to acquire Terra, it was imperative to act now to ensure that CF stockholders have an opportunity to consider our proposal - one that is clearly a superior alternative - prior to you reaching any agreement with Terra," Wilson said in a letter sent Wednesday to CF Industries' board.

Shares of Terra fell 97 cents, or 3.91%, to close at $23.85 on Wednesday.

Regulatory action on Ticketmaster, Live Nation

Sen. Herb Kohl of Wisconsin, chairman of the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, said Tuesday in the hearing that the combination of Ticketmaster and Live Nation should be closely examined.

Lynn Becker, spokesman for Sen. Kohl, told Prospect News on Wednesday that the subcommittee may make recommendations after the public comment and witness response period expires in March.

"Officially they don't have to produce any recommendation. They may just take it as part of the merger antitrust application," she said. "But the hearing is part of the subcommittee's overall investigation into the merger's antitrust implications."

Michael Rapino, president and CEO of Live Nation, and Irving Azoff, CEO of Ticketmaster Entertainment, were called to testify before the subcommittee.

Lawmakers and regulatory agencies have said they plan to thoroughly review the merger.

Beverly Hills, Calif.-based Live Nation is the largest producer of live concerts in the world, and West Hollywood, Calif.-based Ticketmaster is the leading entertainment ticketing and marketing company.

In the all-stock merger, Ticketmaster shareholders will receive 1.384 shares of Live Nation stock for each share of Ticketmaster.

Shares of Ticketmaster shares fell 20 cents, or 3.96%, to close at $4.85 on Wednesday, while Live Nation's stock lost 19 cents, or 5.19%, to close at $3.47.

Friendly offer for CV

Astellas Pharma said this week that it remains committed to a combination and is evaluating its options after CV Therapeutics turned down its $16.00-a-share takeover offer.

However, Astellas is not likely to start a hostile bid for a U.S.-based company, an analyst said Wednesday.

"A hostile bid by Astellas is unlikely, as we are not aware of a prior cross-border hostile bid by a Japanese company," the analyst said. "However, we believe that Astellas is likely to be committed to making a firm, and possibly friendly, offer for CV. We estimate that CV's board is likely to accept an offer at or close to $18.00 per share."

Palo Alto, Calif.-based CV Therapeutics, a biopharmaceutical company, said that Astellas' current offer significantly undervalues the company.

CV Therapeutics' stock rose 8 cents, or 0.52%, to close at $15.56 in trading Wednesday.

Mentioned in this article:

Agrium Inc. NYSE: AGU

Astellas Pharma Inc. Pink Sheets: ALPMY

CF Industries Holdings Inc. NYSE: CF

CV Therapeutics Inc. Nasdaq: CVTX

Live Nation, Inc. NYSE: LYV

Terra Industries Inc. NYSE: TRA

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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