Agrium, Terra Make Deal
Terra Industries Inc. is purchasing a 50% stake in one of Agrium's nitrogen facilities.
October 20, 2009
Terra Industries Inc. will pay $250 million in cash for certain U.S. assets and a 50 percent stake in the Agrium Inc. facility in Carseland, Alberta, Canada, which has an annual capacity of 590,000 short tons of gross ammonia and about 750,000 short tons of granular urea, according to the Associated Press (AP). The stake represents about 340,000 tons of urea and 60,000 tons of ammonia production a year, Agrium says.
The sale is conditional on Agrium acquiring fertilizer company CF Industries, Inc., and Terra raising $600 million of debt capital, the companies say. It should take care of anticipated Canadian regulatory concerns with the proposed Agrium purchase of CF Industries.
“These actions will enable us to keep moving forward with the acquisition of CF Industries,” Agrium CEO Mike Wilson said in a press release.
Agrium has been seeking to acquire CF Industries since February to create the world’s second-largest publicly traded nitrogen fertilizer producer after Yara International ASA of Norway. CF has resisted Agrium’s offers as inadequate. Since January, CF Industries has been attempting to buy Terra; Terra has in turn rebuffed CF Industries. Agrium made its offer on the condition that CF Industries drop its bid for Terra.
Despite repeated rejections, in September, CF renewed its bid to buy Terra Industries, saying it had acquired 7 percent of Terra's shares and that it has offered to buy the rest of Terra in a deal worth nearly $4 billion, according to an AP report. Terra continued to resist the marriage. In October, CF urged Terra shareholders to elect three of its own nominees for Terra's board, in an effort to boost chances for its all-stock takeover bid.
Terra said the purchase will provide greater exposure to cheaper natural gas, a more diverse geographic footprint in North America and ownership in a facility that produces upgraded ammonia-based products, which is part of the company's long-term strategy.
(Sources: Bloomberg; Associated Press)