Interest fades in Agrium bid; Petro Andina wants top dollar; Raymarine shares up on deal talks

By Cristal Cody

Tupelo, Miss., Aug. 17 - Agrium Inc. again pushed back the deadline for its $4.30 billion hostile tender offer for CF Industries Holdings, Inc., but the proposal is losing steam fast among investors and traders, an analyst told Prospect News on Monday.

Also on Monday, Petro Andina Resources Inc. again rejected a C$400 million buyout offer for the Calgary, Alta.-based oil and gas explorer, but the price may be the best offer for the company, an analyst said in an interview.

In other situations on Monday, shares of British marine electronics maker Raymarine plc jumped 27.84% to 16.30p after reports the company is in buyout talks with rival navigation system manufacturer Garmin Ltd.

Looking at Wall Street, stocks fell across all industries over continued concerns about consumer spending and economic recovery.

Investors pushed the Dow Jones Industrial Average down 186.06 points, or 2.00%, to close Monday at 9,135.34.

The Standard & Poor's 500 index dropped 24.36 points, or 2.43%, to 979.73, and the Nasdaq Composite index slid 54.68 points, or 2.75%, to end at 1,930.84.

Agrium interest wanes

Agrium president and chief executive officer Mike Wilson said in a statement on Monday that the Calgary, Alta.-based agricultural products company remains fully committed to a takeover of CF Industries.

The tender offer now is open until Sept. 22. The proposal to acquire CF Industries' shares for $40.00 in cash and one Agrium share per CF Industries share was set to expire on Wednesday.

Agrium had said that 30.14 million shares, or 62.00%, of CF Industries' outstanding stock had been tendered as of June 22.

That number has fallen considerably. Agrium said on Monday that 10.50 million CF Industries shares, or 22.00% of the outstanding stock, had been tendered and not withdrawn as of Friday.

Agrium representatives were not immediately available for additional comment.

"The fact that Agrium is still interested doesn't do anything," an analyst told Prospect News on Monday. "It's just a matter of them hoping that eventually pressure builds for CF management."

The analyst added, "Nobody is trading on it. The people I'm talking to aren't really looking at it. Nobody's really excited about it."

Deerfield, Ill.-based fertilizer manufacturer CF Industries had no immediate comment on Monday.

CF Industries is waiting to hear back from Terra Industries Inc. on the revised $3.83 billion hostile stock bid it made for the company earlier this month. CF Industries has offered a fixed exchange ratio of 0.465 of a share for each Terra share.

Sioux City, Iowa-based Terra said it would consider the offer by the end of August.

Agrium stock lost $2.46, or 5.10%, to close at $45.73 on Monday.

CF Industries shares closed down $3.45, or 4.16%, at $79.42, while Terra's stock fell 99 cents, or 3.03%, to $31.73.

Raymarine looks for buyer

Yair Reiner, an analyst with Oppenheimer & Co., said Monday in a research note released to Prospect News that a Garmin acquisition of Raymarine is a "nice deal if you can get it."

"We believe a combination with Raymarine would constitute a relatively low-risk consolidation play, cutting out redundant costs, rationalizing overlapping product lines, scaling up manufacturing and leveraging a newly expanded channel," he said.

Portsmouth, England-based Raymarine, which makes marine radar and global positioning systems, is Cayman Islands-based Garmin's top rival in the marine segment.

Raymarine, though, is burdened with a heavy debt load and must make a proposal to survive, Reiner said.

"To stay afloat, the company must either secure a new line of credit, execute a major equity raise or sell out," he said.

Raymarine's stock has traded from 8.76p to 136.75p over the past year.

Garmin shares fell 77 cents, or 2.68%, to close at $27.95 on Monday.

Petro Andina in no hurry

Netherlands-based Pluspetrol Resources Corp. NV has offered C$400 million, or C$8.10 a share, in cash for Petro Andina, which has rejected the bid as too low.

Petro Andina said in a statement on Monday that it has received other proposals that the company is considering.

Petro Andina shares closed up 0.94% at C$9.69 on Monday.

Investors believe there is a better bid on the way since the stock has traded consistently higher than the bid, Alexander Klein, an analyst with Blackmont Capital Inc., said in an interview on Monday.

"Clearly, the market thinks it's worth more than Pluspetrol is willing to offer," Klein said.

However, Klein said he doubts Petro Andina's stock will rise much higher.

"I don't think where the stock is trading at right now is necessarily a bad value for the company," said Klein, who has a net asset value of $9.30 a share on the company.

"Would a buyer come in and pay much more from where the stock is trading at? I don't think so."

Pluspetrol has said it wants to expand its oil and gas exploration in Argentina, Colombia and Trinidad.

There is some potential that Petro Andina, which has drilling production in Argentina, Trinidad, Tobago and Colombia, could spin off some of its assets in addition to a sale, Klein said.

"If a potential bidder is not willing to give any value to Trinidad or Colombia, they may spin it off as a separate entity and let the market decide what it's worth," he said.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Garmin Ltd. Nasdaq: GRMN

Petro Andina Resources Inc. Toronto: PAR

Raymarine plc London: RAY

Terra Industries Inc. NYSE: TRA

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