CF Industries continues to reject Agrium in favor of deal with Terra Industries

By Lisa Kerner

Charlotte, N.C., March 23 - CF Industries Holdings, Inc. said its board of directors recommended that the company's shareholders reject Agrium Inc.'s exchange offer to acquire CF Industries.

On March 16, Agrium, a Calgary, Alta., fertilizer company, began its offer to acquire CF Industries. Shareholders can elect to receive one share of Agrium common stock plus $31.70 in cash, 1.7866 Agrium shares or $72.00 in cash per CF Industries common share.

In a March 23 letter to shareholders, CF Industries called the cash-and-stock deal "disadvantageous" and said the offer is counter to CF Industries' "long-term strategy, which focuses on the higher-margin businesses of manufacturing and wholesale distribution of nitrogen and phosphate fertilizers."

CF Industries reaffirmed its intention to pursue a business combination with Terra Industries Inc. in a March 23 letter to that company's board of directors.

In the letter, CF Industries said it is prepared to enter into a negotiated merger agreement with Terra with an exchange ratio based on $30.50 for each Terra share. The exchange ratio would not be less than 0.4129 of a CF Industries share and not more than 0.4539 of a CF Industries share.

According to CF Industries, the $30.50-per-share offer price is an 85% premium over Terra's stock price prior to CF Industries' original offer on Jan. 15.

As previously reported, Terra rejected CF Industries' offer of a fixed exchange ratio of 0.4235 of a CF Industries share for each Terra share. The Sioux City, Iowa, nitrogen products company also rejected CF Industries' unsolicited offer in January.

Deerfield, Ill.-based CF Industries Holdings is the holding company for CF Industries, Inc., a producer and distributor of nitrogen and phosphate fertilizer products.

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