The full text of the letter sent to the CF board of directors Feb. 25, 2009 is as follows:
Board of Directors
CF Industries Holdings, Inc.
4 Parkway North
Deerfield, Illinois 60015-2590
Attention: Stephen R. Wilson, Chairman, President, and Chief Executive Officer
Dear Members of the Board:
On behalf of the board of directors of Agrium Inc. (“Agrium”), I am writing to submit for your consideration a proposal to acquire CF Industries Holdings, Inc. (“CF”) in a transaction that will create significantly more value for your stockholders than your proposal to acquire Terra Industries Inc. (“Terra”).
Under the terms of our cash-and-stock proposal, Agrium would acquire 100% of the outstanding capital stock of CF (the “Proposed Transaction”) at a per share value of US$72.00 based on Agrium’s current share price. Our offer price represents a premium of 30% over CF’s closing price of $55.58 on February 24, 2009, the day before we announced our proposal, a premium of 42% over the 30-day volume-weighted average share price of CF and a premium of 52% over CF’s closing price of $47.23 on January 15, 2009, immediately prior to CF’s announced proposal to acquire Terra. Under the terms of the Proposed Transaction, stockholders of CF would be entitled to receive one Agrium common share and $31.70 in cash for each CF share. Of the approximately $3.6 billion of total consideration, 56% would be in Agrium common shares and 44% would be in cash.
As you know, our two companies had serious discussions regarding a combination prior to CF’s initial public offering in 2005. Since that time, we have closely followed CF and believe that the strategic and business logic of a combination, which was compelling then, is even stronger now. We have the highest regard for CF and its employees and believe that our companies, which share highly compatible cultures and operating philosophies, exhibit complementary strengths both geographically and in terms of our product mix.
We believe the Proposed Transaction represents full and fair value for CF’s stockholders. By offering a combination of cash and Agrium common shares at a substantial premium, and by offering your stockholders the ability to elect which form of consideration they would prefer to receive (subject to the overall limits of cash and shares comprising the aggregate consideration), the Proposed Transaction presents your stockholders with a unique opportunity for significant long-term value while providing liquidity for those of your stockholders wishing to sell their shares at an extremely attractive price.
The Proposed Transaction will create a leading global producer of agricultural inputs with the broadest product offering in the industry. Together, we can combine our respective world-class distribution networks, knowledgeable and experienced employees and first-rate production capabilities to more efficiently and effectively serve the increasingly competitive global agribusiness industry. We anticipate annual operating synergies from the combination will be approximately $150 million, substantially in excess of those contemplated in CF’s proposal to acquire Terra, and your stockholders will share in the value of those synergies through their continued ownership of the combined company.
We share your view of the benefits of creating a stronger North American-based global player that can more effectively compete on the world stage. We think it is readily apparent that the benefits you highlight with respect to a CF-Terra combination are even more compelling in a CF-Agrium combination. Through the successful execution of our growth strategy, Agrium has become a global enterprise that spans the entire agricultural value chain. A combination with Agrium would create a company with a substantially larger global footprint with a combined crop nutrient production capacity of about 17 million tonnes and touching over 20 million tonnes of crop nutrients through our wholesale, retail, and advanced technologies businesses. Our balanced portfolio of nitrogen, phosphate and potash production and distribution, coupled with our more predictable retail and advanced technologies businesses provide for a more stable company, better able to navigate the volatility of commodity cycles. Furthermore, we have a proven track record of accretive acquisitions and successful integrations.
We have thoroughly analyzed a combination of Agrium and CF and are confident such a transaction can be completed expeditiously. We have sufficient cash resources and fully underwritten financing commitments from Royal Bank of Canada and The Bank of Nova Scotia to fund the Proposed Transaction; accordingly, our proposal is not subject to any financing condition.
Our proposal is conditioned on (i) CF’s termination of its bid for Terra, (ii) negotiation of a definitive merger agreement between Agrium and CF, (iii) receipt of the necessary CF board and stockholder approvals, (iv) receipt of necessary regulatory approvals, (v) the absence of any material adverse changes to CF or its business and the continued operation of CF in the ordinary course of business and (vi) the opportunity to conduct limited confirmatory due diligence.
While we would have preferred to approach you privately, we concluded that given your recent unsolicited proposal to acquire Terra, it was imperative to act now to ensure that CF stockholders have an opportunity to consider our proposal – one that is clearly a superior alternative – prior to you reaching any agreement with Terra.
We firmly believe that our Proposed Transaction is an exceptional opportunity for our two companies and our respective stockholders, employees, customers, suppliers and the communities in which we each do business. My leadership team and I are available to meet with you, your management team and your board at any time to discuss the terms and merits of the Proposed Transaction.
This letter is not intended to create or constitute any legally binding obligation, liability or commitment by us regarding the Proposed Transaction and there will be no legally binding contract or agreement between us unless and until a definitive agreement is executed.
We look forward to hearing from you.
Michael M. Wilson
President and Chief Executive Officer