Agrium-CF-Terra Merger Triangle Gets Hostile (AGU, CF, TRA)

Agrium Inc.(NYSE: AGU) does not want to give up on its merger intentions.  The company issued a statement saying that the rejection by CF Industries Holdings, Inc. (NYSE: CF) of its proposed acquisition is a disappointment.  Agrium said this is a fully financed offer of 1 Agrium common share plus $31.70 in cash per share, which comes to $72.00 per CF common share.

That figure is based on Agrium’s price of $40.30 on February 24, 2009, which is the day before the company made its offer.  Agrium also noted that this was without even attempting to engage the company in exploratory discussions.  It also believes that its proposed transaction “is a superb opportunity to create value for both Agrium and CF stockholders.”

The company says it is motivated by the outstanding long-term prospects, rather than CF’s comments that it is a desire to interfere with its attempt to buy Terra Industries (NYSE: TRA).  Agrium further noted that CF management decided to use an unusual non-voting security “to deny their own stockholders a voice in this critical decision.” It also expects to reach about $150 million in operating synergies from the combined companies, which it feels is 50% more than what CF has said it expects from a combination with Terra.

The release also states that Agrium remains fully committed to acquiring CF and that the company is considering all available options. The company intends to commence shortly on an exchange offer to acquire all outstanding shares of CF common stock.  RBC Capital Markets and Scotia Capital are acting as financial advisors to Agrium on the merger.

What is not used as a word in here is HOSTILE.  But that is what the gist of this release is.  It sure sounds like Agrium is planning to pursue a hostile takeover.

JON C. OGG