Proxy Battle Begins in Fertilizer Deal (AGU, CF, TRA)

Canadian fertilizer giant Agrium Inc. (NYSE:AGU) today filed its definitive proxy materials with the SEC in its effort to acquire CF Industries Holdings, Inc. (NYSE:CF)  Agrium is asking CF shareholders to withhold votes from CF’s board nominees in an effort to get CF to negotiate a deal. CF’s annual shareholders meeting is scheduled for April 21st.

According to the letter that Agrium is sending to shareholders, “While this [withholding votes] will not ensure that an Agrium/CF transaction will happen—CF’s takeover defenses effectively require the CF board to approve to [sic] any combination with Agrium—it will send a strong message to the CF board that they should negotiate a mutually beneficial transaction with Agrium.”

Agrium’s letter also refers to the proposed acquisition by CF of Terra Industries Inc. (NYSE:TRA), which the company claims has been structured in such a way as to “take away” CF shareholders’ right to vote on the CF-Terra deal. Agrium claims that there is “only one rational explanation: CF’s board and management must know they risk losing a stockholder vote on a CF/Terra combination because the CF stockholders prefer Agrium’s proposal.”

That’s just reading tea leaves. The proxy vote is what should count in this deal. We’ll probably have to wait until April 21st to find out the score.

For now, Agrium shares are off more than 3%, CF shares are off more than 2.5%, and Terra shares are down nearly 4% in early trading.

Paul Ausick
April 6, 2009