DOW JONES NEWSWIRES
CF Industries Holdings Inc. (CF) said its board has rejected a
takeover offer from Agrium Inc. (AGU) and that it will continue to
pursue a combination with Terra Industries Inc. (TRA) instead.
The fertilizer maker CF said it was prepared to raise its offer
for Terra so long that the companies can agree to a deal.
CF's shares were down 5.7% at $57.13 in premarket trading, while
Agrium shares were down 0.7% at $31.20 in premarket trading. Terra
shares were unchanged from Friday's closes of $26.11.
In a letter to Agrium's board, CF said the bid, initially valued
at $3.6 billion in cash and stock, was "grossly inadequate." The
Agrium offer was a 30% premium over CF's closing price the day
before the deal was announced. A deal would boost Agrium's
wholesale business and result in the world's fourth-largest
fertilizer producer.
CF had said last month its long-term fundamentals remain strong,
but high inventories in the supply chain and uncertainty about crop
acreage could hurt its performance heading into the spring planting
season.
Meanwhile, Terra has been fighting off CF's advances, saying the
roughly $2.7 billion offer wasn't in its shareholders' best
interests. Directors added that because of the Agrium offer, CF's
shareholders weren't likely to approve CF's proposed acquisition of
Terra.
Terra also said the two companies had vastly different
strategies, including CF's higher dependence on agricultural urea
and ammonia sales, an area Terra has moved away from.
In a letter to Terra's board Monday, CF said it would be willing
to raise its offer to as high as 0.4539 share of CF for each share
of Terra as it looks to value Terra at $27.50, a 5.3% premium to
Friday's closing price. CF's current offer was 0.4252 share, which
when initially offered was seeking to value Terra at $20 each. But
CF's offer could fall to as low as 0.4129 share.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com