CF Industries rejects Agrium takeover bid

A major U.S. fertilizer firm has turned down a marriage proposal from Canadian fertilizer and ag retail giant Agrium.

Calgary-based Agrium, late last month, submitted an unasked-for bid to Chicago-area firm CF Industries, whose North American holdings include a major nitrogen fertilizer plant at Medicine Hat, Alta.

But CF, which has its own unsolicited takeover bid in the works for another U.S. fertilizer maker, on Monday wrote Agrium to say its bid is “grossly inadequate and not in the best interests of CF Industries stockholders.”

Agrium’s Feb. 25 offer to CF shareholders was one Agrium share plus US$31.70 in cash, for a value Agrium pegged at US$72 per CF share.

“We are deeply disappointed that CF’s board of directors has rejected Agrium’s proposal without even attempting to engage us in exploratory discussions,” Agrium CEO Mike Wilson said in a release Monday.

CF, in its letter to Agrium on Monday, called the Calgary company’s bid “a transparent attempt to interfere with CF Industries’ proposed business combination” with Terra Industries, a major Iowa-based fertilizer firm.

“It appears that CF’s board and management concluded that CF’s stockholders would choose Agrium’s offer over CF’s proposed Terra acquisition and, as a result, decided to use an unusual non-voting security to deny their own stockholders a voice in this critical decision,” Agrium’s Wilson said Monday.

Agrium, Wilson said, expects to achieve about US$150 million in operating “synergies” from a combination of Agrium and CF, which he said is “50 per cent more than what CF has said it expects from a combination with Terra.”

And Terra has not cheerfully accepted its U.S. suitor’s proposal, either. Sioux City-based Terra — whose own Canadian holdings include a major nitrogen fertilizer plant at Courtright, Ont., south of Sarnia — last Thursday urged its shareholders to reject CF’s offer.

But CF on Monday also sweetened its bid for Terra’s shares, to the equivalent of US$27.50 per share.

“We have been willing to engage in meaningful discussions since we made our offer almost two months ago, and we continue to be willing to engage,” CF’s CEO Stephen Wilson said Monday of his firm’s bid for Terra.

“While our preference is to work together with CF to negotiate a definitive merger agreement, we remain fully committed to acquiring CF and are considering all available options,” Agrium’s Mike Wilson said Monday.

“We intend to commence shortly an exchange offer to acquire all outstanding shares of CF common stock.”

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