Agrium may increase CF Industries bid; CV Therapeutics, Gilead face few regulatory concerns

By Cristal Cody

Tupelo, Miss., March 16 - Consolidation in the fertilizer industry heated up Monday as Agrium Inc. made its hostile bid for CF Industries Holdings, Inc. official while CF Industries pursues its own hostile acquisition of Terra Industries Inc.

Separately, Tokyo-based Astellas Pharma Inc. backed out Monday in pursuing its hostile acquisition of CV Therapeutics, Inc. after the Palo Alto, Calif.-based company signed a deal last week with Gilead Sciences Inc.

CV Therapeutics' deal with Gilead should clear regulatory hurdles, an analyst told Prospect News.

A major shareholder of Charlotte Russe Holding, Inc. said in a regulatory filing that he does not plan another offer and does not support a sale of the retailer.

Meanwhile, the markets closed Monday on a weak start.

The Dow Jones Industrial Average fell 7.01 points, or 0.10%, to 7,216.97.

The Standard & Poor's 500 index dropped 2.66 points, or 0.35%, to 753.89, and the Nasdaq Composite index lost 27.48 points, or 1.92%, to close at 1,404.02.

Three-ring circus

Calgary, Alta.-based Agrium said Monday its offer includes a choice of $72.00 a share in cash; $31.70 in cash and one Agrium share for each CF Industries share; or 1.7866 Agrium shares for each CF share.

The deal allows for up to 44% of CF shares tendered to be exchanged for cash and up to 56% of shares tendered for stock. The offer expires May 19 but could be revised before then.

Agrium president and CEO Mike Wilson said in a statement Monday that the company "would be prepared to increase our offer to reflect additional value that the CF board and management can demonstrate arising from the combination of our two companies."

Agrium has a good track record in pursuing acquisitions, Raymond Goldie, an analyst with Salman Partners Inc., told Prospect News.

Deerfield, Ill.-based CF's board acknowledged the tender offer in a statement on Monday and noted it rejected the bid on March 9.

CF Industries shareholders are likely to accept a bid, though their stance toward management's pursuit of Terra Industries in a deal structured to avoid their vote remains to be seen, Goldie said.

Agrium has a "good track record of making good acquisitions and executing well on them," Goldie said. "We're wondering if the next step will be shareholder revolt."

CF Industries said it will pay $27.50 a share in stock for Terra based on an exchange ratio between 0.4129 and 0.4539 of a share.

Terra's board has rejected the offer.

The key will be in CF Industries' success in acquiring Terra Industries since Agrium's offer is conditioned upon the bid termination for Terra, Goldie said.

"Agrium doesn't want the aggravation of trying to deal with antitrust regulations and would probably walk away," Goldie said.

The fertilizer producer said it has sufficient cash resources and committed financing through Royal Bank of Canada and the Bank of Nova Scotia to fund the cash portion of the deal.

Agrium shares rose 88 cents, or 2.44%, to close at $36.93.

CF Industries shares closed up 9 cents, or 0.13%, at $68.70.

Terra Industries shares rose 82 cents, or 3.06%, to $27.64 in trading Monday.

Astellas backs out

Japanese drug maker Astellas said it will terminate its $16.00-a-share offer for and will withdraw a lawsuit in Delaware Chancery Court against CV Therapeutics and its directors.

"Astellas is a disciplined acquirer and does not see value for Astellas stockholders in CV Therapeutics at the price level of the sale announced on March 12," the company said in a statement.

Foster City, Calif.-based Gilead offered $20.00 a share on March 12 for CV Therapeutics.

Derek Taller, an analyst with Benchmark Co., told Prospect News that CV Therapeutics' deal with Gilead poses no regulatory concerns.

"I don't think that's an issue," he said. "It's an attractive synergy."

Gilead shares fell $1.24, or 2.73%, to close at $44.19.

CV Therapeutics shares lost $1.03, or 4.98%, to close at $19.64.

Charlotte Russe

Allan Karp of KarpReilly Capital Partners, LP said in a filing with the Securities and Exchange Commission on Friday that Charlotte Russe is "floundering" and the major shareholder does not support a sale at "distressed levels."

KarpReilly, which owns 8.9% of outstanding shares of Charlotte Russe, said it is seeking support for three nominees to the board of Charlotte Russe at the company's annual meeting on April 28.

The investor had offered $9.00 to $9.50 a share for the company last year, but the board rejected the offer. The company's management since has said it is exploring strategic alternatives, including a sale.

KarpReilly, LLC co-founder Allan Karp said in the filing that "we have serious doubts that an offer to acquire the company will emerge from this process at a level that would be attractive to stockholders."

Amy Noblin, an analyst with Pali Capital Inc., said Monday in a research note that Charlotte Russe is "financially strong enough to weather more of the storm, a sale is not out of necessity at this juncture."

Shares of the San Diego-based retailer dropped 39 cents, or 5.95%, to close at $6.17 on Monday. The stock has traded from $3.98 to $20.34 a share over the past year.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

CV Therapeutics, Inc. Nasdaq: CVTX

Gilead Sciences Inc. Nasdaq: GILD

Terra Industries Inc. NYSE: TRA

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