CF expects deal OKs in August; PartnerRe buy likely to close by February; Entrust awaits votes

By Cristal Cody

Tupelo, Miss., July 7 - CF Industries Holdings, Inc. pushed forward with its attempted hostile takeover of Terra Industries Inc. and now expects to receive regulatory clearance of the transaction by early August.

Also on Tuesday, a market source said that PartnerRe Ltd.'s $2 billion offer to acquire Paris Re Holdings Ltd. should close by February 2010.

In other situations, digital security software firm Entrust, Inc. said Tuesday that it received support from two proxy advisory services for its $114 million buyout by Thoma Bravo, LLC, but some investors are against the proposal, an analyst told Prospect News.

Meanwhile, stocks slumped on Tuesday.

The Dow Jones Industrial Average fell 161.27 points, or 1.94%, to close at 8,163.60.

The Standard & Poor's 500 index slipped 17.69 points, or 1.97%, to 881.03, and the Nasdaq Composite index dropped 41.23 points, or 2.31%, to end the session at 1,746.17.

Three-way battle continues

CF Industries said late Monday that it has substantially complied with the U.S. Federal Trade Commission's second request for additional information on the proposed combination with Terra.

Absent any FTC challenges, the pre-merger waiting period for CF Industries' proposal will expire on Aug. 5, the company said in a statement.

CF Industries said it has extended its exchange offer for Terra common stock to Aug. 7.

The offer had been scheduled to expire on Friday. CF Industries said that as of Friday, 2,860,681 shares of Terra common stock had been tendered.

Deerfield, Ill.-based CF Industries, which produces and distributes nitrogen and phosphate fertilizer products, has offered to buy Sioux City, Iowa-based nitrogen provider Terra in an all-stock deal valued at $30.50 per share.

CF Industries is dealing with its own $4 billion attempted takeover by Agrium Inc., whose offer expires on July 22.

As of June 23, 62.00% of CF Industries shares had been tendered.

Calgary, Alta.-based agricultural producer Agrium has offered $35.00 in cash and one share of Agrium for each CF Industries share.

Shares of Terra lost 74 cents, or 2.87%, to close Tuesday at $25.03.

CF Industries shares fell $1.71, or 2.33%, to close at $71.70.

Agrium's stock closed down $1.64, or 4.19%, at $37.47.

PartnerRe faces competition filings

Bermuda-based PartnerRe plans to acquire Paris Re, a Swiss diversified reinsurer, for 0.3 of a share for each Paris Re share plus a capital distribution of $310 million, or $3.85 a share.

"We believe that the current discount to the terms of the offer is attractive, although liquidity in Paris Re shares is the main issue in structuring a trade," a market source said Tuesday. "We feel it is likely that the transaction will go through at the agreed terms, with settlement around mid to late February."

Paris Re was the former reinsurance business of AXA RE, which was publicly listed in 2007.

In the first step of the transaction, PartnerRe will acquire an additional 57.00% of Paris Re's outstanding common shares in a block purchase by the fourth quarter and then hold a voluntary exchange offer for all remaining shares at the same exchange ratio.

The exchange offer is expected to close in the first quarter of 2010.

The market source said no regulatory issues are expected, though PartnerRe must file for clearance in the United States, Canada, Europe, France and Switzerland.

"The regulatory approvals will take three to four months," the source said. "On this basis, the regulatory process is expected to take until October."

PartnerRe shares slipped 90 cents, or 1.41%, to end at $62.97 on Tuesday.

Paris Re's stock rose 3.33% to €14.57.

Entrust investors vote Friday

Entrust shareholders will vote at a special meeting on Friday on the offer of $1.85 in cash for each share.

On Tuesday, Entrust said Glass, Lewis & Co. and Proxy Governance, Inc. each recommended that stockholders vote in favor of the proposal.

Jay Meier, an analyst with Feltl & Co., told Prospect News on Tuesday the transaction is not set yet.

"There are two opposing views on this deal - some shareholders would like it done and some wouldn't," he said. "We've had some activist shareholders trying to push the company to sell out and some activist shareholders more recently who said the valuation proposition isn't high enough."

Shares of Entrust have traded from 98 cents to $2.95 over the past year.

Entrust also said Tuesday it expects to post a second-quarter loss because of the acquisition costs.

For the three months ended June 30, Entrust estimates a loss of about $1.6 million, or 3 cents a share, compared with a loss of $422,000, or 1 cent a share, a year ago.

Meier said the quarterly loss should have no impact on Friday's vote.

"The company generated quite a bit of cash during the quarter, so without any debt on the balance sheet, the company is in a stronger financial position than previously thought," he said.

Dallas-based Entrust expects the transaction to close in the third quarter.

Entrust shares rose 1 cent, or 0.55%, to close at $1.82 on Tuesday.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Entrust, Inc. Nasdaq: ENTU

PartnerRe Ltd. NYSE: PRE

Paris Re Holdings Ltd. Euronext: PRI.PA

Terra Industries Inc. NYSE: TRA

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