Agrium raises offer for CF Industries

By Susanna Moon

Chicago, March 27 - Agrium Inc. announced an increase in its exchange offer to acquire shares of CF Industries Holdings, Inc.

CF Industries shareholders will now receive $35.00 in cash, up 10.4%, as well as one common share of Agrium for each CF Industries share.

Based on Agrium's closing stock price Thursday, the increased offer represents a premium of 35% to CF Industries' closing price on Feb. 24, the day before Agrium announced its initial proposal, and of 48% to the 30-day volume-weighted average price through that date.

Agrium also said it filed preliminary proxy materials with the Securities and Exchange Commission urging CF Industries stockholders to withhold all votes in connection with the election of the three nominees to the CF Industries board of directors at the company's 2009 annual meeting.

"Agrium's increased offer reflects our firm commitment to completing this transaction," Mike Wilson, Agrium's president and chief executive officer, said in a press release. "For CF stockholders - who would receive a substantial premium plus significant participation in the upside of the combination - our offer is a far better alternative than paying a substantial premium for Terra Industries. Moreover, we would consider increasing our offer further to reflect any additional value that the CF board and management can demonstrate arising from the combination of our two companies."

"We do not understand why CF would summarily reject our offer without any attempt to negotiate a mutually beneficial transaction," Wilson continued. "We are disappointed that CF would attack our offer with selective information and flawed financial analysis - and disenfranchise CF stockholders by restructuring the Terra offer to take the vote away from CF stockholders."

Agrium exchange offer

On March 16, Agrium said it began its exchange offer for CF Industries after CF Industries refused to enter into discussions.

"CF Industries' refusal to engage in discussions with Agrium left us with no choice but to take our offer directly to CF stockholders," Wilson said in a previous news release.

Under Agrium's original offer, CF Industries stockholders would have received $31.70 in cash and one common share of Agrium for each CF Industries share.

CF Industries stockholders were also given the option of electing to receive either 1.7866 common shares of Agrium or $72.00 in cash, subject to proration, for each CF Industries share held.

Agrium said not more than 44% of the shares tendered will be exchanged for cash and not more than 56% of the shares tendered will be exchanged for Agrium common shares.

The exchange offer will expire at midnight ET on May 19.

According to Agrium, it has sufficient cash resources and committed financing underwritten by Royal Bank of Canada and the Bank of Nova Scotia to fund the cash portion of the offer.

RBC Capital Markets is acting as dealer manager, and Georgeson Inc. is the information agent in connection with the offer.

CF Industries pursues Terra offer

Agrium, a Calgary, Alta., fertilizer company, conditioned its proposal upon CF Industries' termination of its exchange offer for Terra Industries Inc.

On March 9, CF Industries' board of directors rejected Agrium's offer to acquire the company and reaffirmed its intention to move forward with a business combination with Terra.

As previously reported, CF Industries said it would agree to an exchange ratio based on $27.50 for each Terra share, with an exchange ratio of not less than 0.4129 of a CF Industries share and not more than 0.4539 of a CF Industries share.

Terra had 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.

CF Industries said it would structure the transaction so that a vote by CF Industries stockholders would not be necessary.

CF Industries filed preliminary proxy materials with the Securities and Exchange Commission to nominate three independent directors to replace members of Terra's board of directors at Terra's 2009 annual stockholders meeting.

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

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Terra Industries Inc. NYSE: TRA

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