Terra Rejects CF's Latest Offer
A sweetened offer from CF Industries has failed to change the minds of Terra Industries' board of directors, stating it "substantially undervalues" Terra. CF's response?
August 26, 2009
Terra Industries Inc.sent a letter to CF Industries Holdings Inc.on Aug. 25 responding to CF’s latest offer dated Aug. 5. Terra said it carefully considered the proposal and its board unanimously concluded that 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 Terra shareholders than would owning Terra on a stand-alone basis.
The Sioux City-based company today again rejected a takeover offer from rival fertilizer maker CF Industries.
In a letter to CF, Terra President and CEO Mike Bennett and Terra Chairman Henry Slack said CF's latest offer "substantially undervalues'' Terra and would "run counter to Terra's strategic objectives.''
Earlier this month, Deerfield, IL-based CF raised its fixed exchange ratio to 0.465 shares of CF Industries for each Terra common share, and offered to return $1 billion in cash to shareholders of the combined company.
The sweetened deal would be worth more than $3.7 billion, a 29 percent premium based on Aug. 25 closing share prices and more than double what CF first offered for the Sioux City-based company in January.
In response to Terra's rejection, CF said Tuesday that it "has made a full and fair offer with an exchange ratio premium of over 35 percent in an all stock transaction."
In a statement, CF President and CEO Stephen Wilson said it is confident that Terra shareholders will support CF Industries' nominees at Terra's annual meeting, which he said "should have been held by now.''
CF, which hopes to take a dominant position in the North American nitrogen and phosphate fertilizer market, expects the proposed bid to produce annual cost savings of $105 million to $135 million.
While trying to potentially buy Terra, CF is also considering a takeover bid for its operations from rival Agrium.
Last month Canada-based Agrium extended a deadline for CF to decide on its offer. CF has consistently resisted the takeover attempt, saying Agrium is undervaluing the company.
Agrium, which wants CF to drop its pursuit of Terra, said it remains interested in acquiring CF.