Fertilizer Makers Won't Dance (CF, AGU, TRA)

For the second time in as many weeks, CF Industries Holdings, Inc. (NYSE:CF) has rejected an offer from Agrium Inc. (NYSE:AGU), saying that “Agrium’s offer is grossly inadequate, substantially undervalues CF Industries and is not in the best interests of CF Industries and its stockholders.”  CF repeats its claim that the Agrium offer is “opportunistic,” as well as an attempt to torpedo CF’s bid to takeover Terra Industries (NYSE:TRA).

CF has also provided additional detailed reasons for recommending that shareholders reject the Agrium offer. CF claims that “Based on daily closing prices of Agrium shares and CF Industries shares, the implied value of Agrium’s offer represented a premium of only 1.8% during the one-year period prior to February 25, 2009.”

CF also published a letter to the board of Terra that sweetened CF’s offer for Terra to $30.50/share, which CF claims is a premium of more than 85% to Terra’s stock price at the time of the original offer in January. Two weeks ago, CF bumped its premium to 70%. CF’s offer is still all stock, with no cash involved. CF notes wistfully that Terra has still not scheduled its annual shareholders meeting, which it must hold by May 15th.

In early trading, Agrium shares are up nearly 4%, CF shares are up nearly 3%, and Terra shares are up almost 5%. The overall market is up about 2% on details of the US Treasury’s plans to soak up the toxic bank assets.

Paul Ausick
March 23, 2009