CF Industries sticks with Terra bid; Nobel may go it alone; IBM might bid $10.30/share for Sun

By Cristal Cody

Tupelo, Miss., March 19 - CF Industries Holdings, Inc. said late Thursday that it voluntarily withdrew its notification to the Federal Trade Commission and the U.S. Department of Justice for it hostile takeover attempt of Terra Industries Inc. and will refile on Monday.

Also on Thursday, private school operator Nobel Learning Communities, Inc. said that its board has unanimously rejected a $13.50-per-share cash takeover bid by Knowledge Learning Corp. An analyst told Prospect News on Thursday that Nobel may forgo all offers and go it alone.

In other activity, International Business Machines Corp. is likely to make a firm offer for Sun Microsystems, Inc. for at least $10.30 a share, an analyst said Thursday.

Meanwhile, shares of Eddie Bauer Holdings, Inc. sank by more than 46% on Thursday after the clothing retailer reported heavy fourth-quarter losses and said it may violate upcoming loan requirements.

Moving to market activity, investors pulled the plug on a continued rally and sent the Dow Jones Industrial Average down 85.78 points, or 1.15%, to close at 7,400.80 on Thursday.

The Standard & Poor's 500 index lost 10.31 points, or 1.30%, to 784.04, and the Nasdaq Composite index dropped 7.74 points, or 0.52%, to 1,483.48.

CF Industries' merger tactics

Deerfield, Ill.-based CF Industries said it withdrew the pre-merger notification to allow the agencies more time to review the information regarding the acquisition.

Sioux City, Iowa-based Terra Industries, a leading nitrogen provider for the agriculture industry, has turned down the offer valued at $27.50 a share in stock.

CF Industries is facing its own hostile takeover attempt from Canadian fertilizer maker Agrium Inc., which has offered CF shareholders $72.00 a share in cash and stock.

Shares of CF Industries added 25 cents, or 0.36%, to $69.42 in trading, while Terra's stock lost 21 cents, or 0.75%, to close at $27.92 on Thursday.

Agrium's stock gained 68 cents, or 1.83%, to close at $37.83.

Private school rejection

Portland, Ore.-based Knowledge Learning reduced its takeover offer on March 10 after originally offering $17.00 per share in September for Nobel Learning.

Nobel president and chief executive George Bernstein said in a letter sent to Knowledge Learning's chairman and CEO, Felicia Thornton, that the revised proposal "significantly undervalues the company."

Bernstein said the company's board is confident about Nobel's ability to continue as an independent company.

West Chester, Pa.-based Nobel Learning Communities operates more than 180 private preschool, elementary and middle schools in 15 states.

"Our board of directors and management are very confident in our company's ability to continue as an independent company to create and deliver superior value for all of our stockholders," George Bernstein said in the letter.

Nobel said it continues to operate at the top of the industry and is poised to capitalize on its own acquisitions of smaller operators. Nobel blames the stock price on general market conditions.

However, the board "will remain open to considering strategic transactions which fully and fairly recognize the company's value and are in the best interest of stockholders."

Thornton said in a statement Thursday the company was disappointed that Nobel Learning had rejected the "well thought out" proposal, which was revised in part because of the soured economy.

Privately operated Knowledge Learning of Portland, Ore., operates 1,700 community-based early childhood education and care centers across the country.

Analysts hadn't expected Nobel to accept the lower offer.

Trace Urdan, an analyst with Signal Hill Group LLC, said in an interview with Prospect News that the company's management prefers to stay independent.

"I don't think they've finished what they're doing yet and once they go into Knowledge, they'll get swallowed up and won't be able to execute on their plan," he said.

Nobel shares lost 43 cents, or 3.60%, to close Thursday at $11.50.

Sun Micro targeted at $10.30/share

Santa Clara, Calif.-based Sun and Armonk, N.Y.-based IBM declined to comment on the rumors that have sent shares of Sun upward.

"There appears to be a strong strategic rationale for IBM's acquisition of Sun," an analyst said in a research note on Thursday. "We believe that the threat posed by Cisco [Systems, Inc.] is likely to be one of the main reasons why IBM decided to expand further into the server segment."

If IBM does make an offer, no counter bids are expected.

"Sun appears to have put itself up for sale since December 2008," the analyst said. "In our view, Sun is likely to have contacted several potential bidders to maximize the bid price."

Shares of Sun Microsystems fell 26 cents, or 2.92%, to close at $8.63 on Thursday.

IBM's stock gained 71 cents, or 0.77%, to $92.66.

Cisco shares closed at $16.23, down 27 cents, or 1.64%.

Eddie Bauer rings up losses

Eddie Bauer Holdings shares sank by more than 46% on Thursday after the company reported heavy fourth-quarter losses and said it may violate upcoming loan requirements.

The Bellevue, Wash.-based clothing retailer said in a filing on Wednesday with the Securities and Exchange Commission that it may violate the terms of a $225 million term loan and plans to amend the agreement.

The company also said it expects to report losses for the fourth quarter ended Jan. 3 of $127.5 million, or $4.13 per share.

Shares fell 36 cents, or 46.15%, to close at $0.42 on Thursday. The stock has traded from $0.30 to $8.72 over the past year.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Cisco Systems, Inc. Nasdaq: CSCO

Eddie Bauer Holdings, Inc. Nasdaq: EBHI

International Business Machines Corp. NYSE: IBM

Nobel Learning Communities, Inc. Nasdaq: NLCI

Sun Microsystems, Inc. Nasdaq: JAVA

Terra Industries Inc. NYSE: TRA

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