By Steve Gelsi
NEW YORK (Dow Jones) -- CF Industries Holdings Inc. said Monday
its board of directors rejected a $3.6 billion offer from Canadian
fertilizer giant Agrium Inc. as "grossly inadequate" while changing
the terms of its own offer to buy smaller rival Terra Industries so
as to bypass a vote of shareholders.
Deerfield, Ill.-based CF Industries (CF) said it'll now pay
$27.50 in stock for each share of Terra Industries (TRA), based on
an exchange ratio ranging from 0.4129 to 0.4539.
The price represents a premium of $1.39, or 5%, over Terra
Industries' closing price of $26.11 a share on Friday.
Under the new terms, CF Holdings will issue up to 19.9% of its
outstanding shares of common stock and shares of preferred
stock.
"Approval of CF Holdings stockholders will not be required to
issue the common stock or the preferred stock in the transaction,"
CF Holdings said.
If the merger were to close, stockholder approval would be
required for the conversion of the preferred stock into common
stock.
Shares of Terra Industries fell more than 3% to $25.19 in
morning action, while CF Industries traded fractionally lower to
$60.09. 5. Agrium's U.S.-listed shares also ticked fractionally
lower, changing hands at $31.29.
Sioux City, Iowa-based Terra officially rejected an earlier
offer from CF Industries on March 5. CF Industries initially bid
0.4235 of a share of its stock for each share of Terra Industries
on Jan. 15.
That offer was worth about $18.73 a share based on CF
Industries' closing price of $44.25 a share on Jan. 14. Since then,
CF Industries' shares have rallied.
Also Monday, CF Industries said the Feb. 25 acquisition offer
made by larger rival Agrium , (AGU) isn't in the best interest of
the company or its shareholders.
"CF Industries ... believes that Agrium's proposal is a
transparent attempt to interfere with CF Industries' proposed
business combination with Terra," CF Industries said in a letter to
Agrium provided to its shareholders.
Agrium offered about $3.6 billion for CF Industries on Feb. 25
in what would be a cash-and-stock deal valued at the time at $72 a
share. CF Industries closed Friday with a market capitalization of
$2.93 billion.