The target of a Canadian hostile takeover bid for U.S. fertilizer market share has again decided to stalk rather than wait and be stalked.
Chicago-based CF Industries, which for over a year has fought off hostile bids from Calgary-based fertilizer and ag retail giant Agrium, on Tuesday tabled a new cash-and-stock bid for nitrogen fertilizer firm Terra Industries.
CF had abandoned a year-long bid for Terra in January, a month before its Sioux City-based rival agreed to an offer from Norwegian chemical and fertilizer firm Yara International.
CF’s bid as of Tuesday is US$37.15 plus 0.0953 CF shares per Terra share, for a total offer of about US$4.33 billion.
“We withdrew our prior offer because we believed that Terra was unwilling to agree to a sale,” CF CEO Stephen Wilson said in a release Tuesday.
“Now that Terra is for sale, we have made an offer that is superior to Yara’s substantially lower, highly conditional offer.”
CF’s new and fully financed offer is subject to Terra terminating its deal with Yara and entering into an agreement with CF, the new bidder said.
According to a separate release from Terra on Tuesday, the Yara agreement may be terminated “under certain circumstances,” such as if Terra gets a superior offer and provides advance notice to Yara but Yara doesn’t match the superior proposal within five business days.
If the Yara deal is terminated under such circumstances, Terra said Tuesday, Yara would be entitled to a US$123 million breakup fee. Terra said its officials were meeting Tuesday to evaluate CF’s new offer.
“We do not understand how Terra could have entered into an agreement with Yara without giving CF Industries an opportunity to bid on a level playing field,” CF’s Wilson wrote in a letter to Terra executives dated Tuesday.
“We also do not understand how Terra could have accepted an offer from Yara with a risk-adjusted present value that we believe was not higher than the offer CF Industries had made in December 2009.”
The ongoing bids, including Yara’s for Terra, Agrium’s for CF and CF’s for Terra, all have Canadian assets at stake.
Yara’s only major Canadian property is the former Saskferco N plant at Belle Plaine, Sask., while Terra and CF own nitrogen fertilizer plants at Courtright, Ont. and Medicine Hat, Alta. respectively.
Also, to appease Canadian competition regulators in anticipation of a CF deal, Agrium arranged to sell a 50 per cent stake in its N fertilizer facility at Carseland, Alta. to Terra. That sale is conditional on Agrium winning control of CF.
With that agreement in mind, it’s not known how or if Canadian regulators will respond to the proposed Yara/Terra merger.