Terra & CF, Back in the Merger Wars (TRA, CF, MOO)

Terra Industries Inc. (NYSE: TRA) is back in the mergers and acquisitions spotlight as the target of CF Industries Holdings, Inc. (NYSE: CF).  If this sounds familiar, it is because CF tried to do a deal in 2009.  This is less than two months after it dropped a hostile bid for the company.  Try, try, try again.  CF is now offering $47.40 for the company, which equals $37.15 per share in cash and the rest in stock.

How this plays out will be interesting.  Terra has a deal from Yara in Norway valued at about $41.10 per share.  CF withdrew its bid under the gumption that it believed Terra would not sell at all but now it is trumping Yara with a better bid.  What may be more interesting is that break-up fees or termination fees could come into play here.

This is likely to put a focus on other fertilizer and potash companies today despite poor earnings data from the group.  We have yet to see any reaction at all in the Market Vectors Agribusiness ETF (NYSE: MOO) as a result of the deal.  In that ETF, CF and Terra make up only about 3.2% of that ETF, while Yara is about 4% of the ETF alone.

CF is down by 6.8% at $100.20 on almost 450,000 shares and Terra is up 12.6% at $46.40 on 9.3 million shares.  For Terra, this marks a new 52-week high at anything above $43.13.

JON C. OGG