CF Industries rejects Agrium’s latest offer

The board of U.S. fertilizer maker CF Industries has turned down an even richer marriage proposal from Canadian fertilizer and ag retail giant Agrium.

In a release Sunday, the Chicago-area company’s board again urged CF stockholders to reject Agrium’s latest overture, saying it’s “grossly inadequate, substantially undervalues CF Industries and is not in the best interests of CF Industries and its stockholders.”

Calgary-based Agrium on Friday said it would raise the cash portion of its unsolicited offer by 10 per cent to US$35, plus one common Agrium share, for each CF share.

“We strongly believe that continuing to pursue our long-term strategy, including our proposed business combination with Terra Industries, is the best way” to provide stockholder value, CF CEO Stephen Wilson said Sunday.

Terra Industries, a Iowa-based player in the U.S. fertilizer industry, is the target of an unsolicited offer by CF, which on March 23 boosted its own initial bid to an all-stock offer worth US$30.50 per Terra share.

But Terra’s board on Tuesday also rejected CF’s latest proposal. It “continues to run counter to Terra’s strategic objectives, substantially undervalues Terra both absolutely and relative to CF, and would deliver less value to our shareholders than would owning Terra on a stand-alone basis,” Terra CEO Michael Bennett and chairman Henry Slack wrote Tuesday in a letter to CF.

CF recently put forward a slate of directors for election to Terra’s board, and has urged Terra shareholders to support its pro-takeover slate. Terra is due to hold an annual shareholders’ meeting before May 15, CF said.

Agrium, meanwhile, last week filed preliminary proxy materials with the U.S. Securities and Exchange Commission in connection with CF’s own upcoming annual shareholders’ meeting, urging CF stockholders to “withhold” all votes in connection with the election of three CF nominees to the CF board of directors.

Canadian assets are at stake in both companies’ offers, as CF operates a major nitrogen fertilizer plant at Medicine Hat, Alta., while Terra Industries also has a major nitrogen fertilizer facility at Courtright, Ont.

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