Agrium, CF, Terra prolong fertilizer takeover wars

AP News
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Posted: Nov 23, 2009 10:39 AM

The fertilizer wars persisted on Monday as Agrium Inc. vowed to continue its pursuit of CF Industries Holdings Inc., while CF resubmitted its buyout offer to Terra Industries Inc., only to be promptly rejected.

"Agrium is emboldened by the overwhelming support it received from CF stockholders," said Agrium CEO Mike Wilson.

Last Thursday, Agrium said that shareholders controlling 62 percent of CF Industries stock backed its $5 billion buyout offer, which CF Industries' management is vehemently against. Agrium's offer includes $45 in cash and one Agrium common share per CF share.

Meanwhile, on Monday, Terra again rejected CF's $4.1 billion cash and stock offer. Over the weekend CF resubmitted the bid along with a "go shop" provision, which allows Terra to actively solicit better acquisition proposals from third parties for about 30 days after the agreement is signed.

This comes on the heels of CF's victory in electing its director nominees to Terra's board, a move that significantly advanced its bid for the rival fertilizer maker and could jeopardize Agrium's takeover grab.

It's the latest development in the fertilizer industry's takeover tussle, which began when CF made its first $3.6 billion bid for Terra in January. The next month, Canada's Agrium Inc. offered to buy CF in an effort to block its rival's grab for Terra. Agrium's offer is conditioned on CF stopping its pursuit of Terra.

The fertilizer industry's hunger for consolidation intensified at the start of the year when company share prices had been beaten down. As the economy declined, struggling farmers scaled back demand for fertilizer, driving down prices and stock values for fertilizer companies.

Share prices have since recovered with an improving outlook for the industry, but still remain far below last year's levels.

Shares of CF rose $1.31 to $84.04 on Monday. Agrium shares climbed 82 cents to $58.13. Shares of Terra fell 49 cents to $39.61.