Agrium takeover target ups the ante

U.S. fertilizer firm CF Industries, the subject of a hostile takeover bid by fertilizer and ag retail giant Agrium, has raised its bid for its own takeover target, Iowa-based Terra Industries.

Chicago-based CF on Monday boosted its unsolicited bid for Terra to an all-stock offer worth US$30.50 per Terra share. CF said its new offer represents a premium of “over 85 per cent” to its original offer on Jan. 15.

“We continue to believe that a business combination between CF Industries and Terra is a compelling combination with a number of strategic benefits,” CF CEO Stephen Wilson wrote in a letter Monday to Terra’s board.

“We are confident that Terra’s stockholders agree with us and will show their support for the transaction by voting for our slate of directors at Terra’s 2009 annual meeting,” which, Wilson wrote, is to be held no later than May 15.

Both companies’ holdings include major nitrogen fertilizer plants in Canada, with CF operating at Medicine Hat, Alta. and Terra at Courtright, Ont.

Calgary-based Agrium on March 16 did an end-run around CF’s board with its own proposal, issuing an exchange offer to CF stockholders worth either US$31.70 in cash and an Agrium share for each CF share, or US$72 cash.

CF, in a letter rejecting Agrium’s offer the previous week, called the Canadian firm’s bid “a transparent attempt to interfere with CF Industries’ proposed business combination” with Terra.

“CF’s refusal to engage in discussions with Agrium left us with no choice but to take our offer directly to CF stockholders,” Agrium CEO Mike Wilson said March 16, describing his company’s bid for CF as a “far superior alternative” for CF shareholders, “as they receive a premium rather than pay a premium to Terra stockholders.”

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