CF Industries’ Board Of Directors Recommends Its Stockholders Reject Agrium’s Exchange Offer

CF Industries sent the following letter to its stockholders:

March 23, 2009

CF INDUSTRIES’ BOARD RECOMMENDS THAT YOU REJECT AGRIUM’S OFFER

Dear Fellow CF Industries Stockholder:

On March 16, 2009, Agrium Inc. commenced an exchange offer to acquire your shares at an exchange ratio of 1.0 common share of Agrium common stock plus $31.70 in cash, or 1.7866 Agrium common shares (subject to proration) or $72.00 in cash (subject to proration), per CF Industries common share.

Following a careful review of all aspects of the Agrium offer with management and its legal and financial advisors, your board concluded that Agrium’s offer is grossly inadequate, substantially undervalues CF Industries and is not in the best interests of CF Industries and its stockholders.

CF Industries’ board of directors believes that the continued pursuit of CF Industries’ long-term strategy, including its proposed strategic business combination with Terra Industries Inc., will create superior value for CF Industries stockholders and provide a significantly better growth platform than a combination with Agrium.

CF Industries’ board of directors considered numerous factors in making its recommendation, including the following:

  • Agrium’s offer is grossly inadequate and substantially undervalues CF Industries. The Board believes that Agrium’s offer does not fully reflect the intrinsic value of CF Industries, resulting in virtually no economic premium to CF Industries stockholders, and no premium for control of CF Industries. The inadequacy of the premium is particularly striking when measured against recent historical periods prior to the announcement of Agrium’s proposal on February 25, 2009. Based on daily closing prices of Agrium shares and CF Industries shares, the implied value of Agrium’s offer represented a premium of only 1.8% during the one-year period prior to February 25, 2009.
  • The timing of Agrium’s offer is opportunistic. The opportunistic timing of the offer, which includes a substantial cash component, takes advantage of the recent decline in share prices across the fertilizer sector and global equity markets, inflating the premium described by Agrium in their prospectus. Agrium’s CEO has acknowledged publicly that Agrium is attempting to buy CF Industries at a low valuation multiple, at a low point in the fertilizer cycle and at a low point in the stock markets.
  • The cash-and-stock nature of Agrium’s offer is disadvantageous to CF Industries stockholders. Approximately 44% of the total consideration is payable in cash. As a result, if the Agrium transaction were completed, CF Industries stockholders would be unable to participate in any recovery of the fertilizer sector or the global equity markets to the extent of the cash consideration. In addition, the substantial cash component prevents CF Industries stockholders from fully participating in the realization of any synergies resulting from the consummation of the transaction. Agrium has also elected to structure the offer and the second-step merger as a fully taxable transaction, which eliminates the ability of CF Industries stockholders, even stockholders that elect and receive 100% of the consideration payable in the offer or second-step merger in Agrium common shares, to determine when to recognize a gain or loss on their CF Industries shares.
  • The cash component of the Agrium offer represents no net increase in value to CF Industries stockholders. CF Industries’ own cash and debt capacity at December 31, 2008 generates more than $30 per CF Industries common share. The cash component of Agrium’s offer is being effectively funded by CF Industries and its stockholders receive virtually no additional cash value from the Agrium offer. As a result, CF Industries is itself funding the cash in Agrium’s offer and CF Industries stockholders are being asked to exchange a share of CF Industries, the best performing stock in the peer group, for a share of Agrium, one of the worst performing stocks in the peer group.
  • Agrium’s offer is fundamentally at odds with CF Industries’ long-term strategy, which has proven to be very successful. The offer is counter to CF Industries’ long-term strategy, which focuses on the higher-margin businesses of manufacturing and wholesale distribution of nitrogen and phosphate fertilizers. CF Industries’ board of directors believes that continuing to pursue this strategy as a standalone company will deliver more value to stockholders of CF Industries than the offer. In contrast, Agrium has pursued the opposite strategy, emphasizing and investing in a large retail, lower-margin business (representing approximately 55% of Agrium’s 2008 revenue) that competes directly with Agrium’s and CF Industries’ wholesale customers.
  • CF Industries’ record demonstrates the success of its business strategy; Agrium has underperformed. The board of directors believes that CF Industries’ successful operational track record and strategies for growth have been recognized by the market. At the same time, Agrium has significantly underperformed CF Industries and the global peer group. From CF Industries’ initial public offering through January 15, 2009, CF Industries shares increased 192%, outperforming the global peer group, which increased 87%. During this time, Agrium common shares increased only 34%.
  • Agrium’s offer is an attempt to interfere with CF Industries’ proposed strategic business combination with Terra Industries. The board of directors believes that a business combination with Terra will create superior value for CF Industries stockholders and a significantly better growth platform than a combination with Agrium. In fact, the board believes that the Agrium offer is a transparent attempt to derail CF Industries’ proposed business combination with Terra.
  • The combination of Agrium and CF Industries may expose CF Industries’ stockholders to significant risks and uncertainties.
  • The synergies assumed in Agrium’s offer are poorly delineated and uncertain.
  • The Board believes that CF Industries’ phosphate business is of substantially higher quality than Agrium’s phosphate business.
  • Several of Agrium’s expansion projects and investments in nitrogen manufacturing have underperformed and/or resulted in substantial write-downs.
  • The market has reacted negatively to Agrium’s offer.

CF INDUSTRIES’ BOARD WILL CONTINUE TO WORK IN YOUR BEST INTERESTS

CF Industries’ board of directors has made its recommendation to reject Agrium’s offer because the board of directors believes that the offer is grossly inadequate and substantially undervalues CF Industries, is fundamentally at odds with CF Industries’ long-term strategy which has been very successful, and exposes CF Industries and its stockholders to significant risks and uncertainties.

CF Industries’ board and management team will continue to act in the best interests of CF Industries and its stockholders. We encourage you to read the enclosed Schedule 14D-9, which provides further details with regard to the Board’s recommendation and discusses the factors that the Board carefully considered and evaluated in making its decision to reject Agrium’s offer.

If you have any questions concerning CF Industries’ Schedule 14D-9 or require additional copies of any materials filed with the Securities and Exchange Commission, please contact our information agent, Innisfree M&A, toll-free at (877) 456-3507.

Thank you for your continued support and we appreciate your interest in CF Industries.

Sincerely,
Stephen R. Wilson
Chairman, President and Chief Executive Officer

(Source: PRNewswire)

Topics:

Leave a Reply

Crop Inputs Stories

Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Shareholder Proposes Monsanto ‘Hostile Takeover’
July 20, 2016
One of Bayer AG’s top 20 shareholders said Wednesday it may make sense for the life-science company to launch an Read More
Trending Articles
Heritage Cooperative
Retail FacilitiesKahler Automation Designs State-Of-The-Art Facility For Heritage Cooperative
July 4, 2016
Heritage Cooperative in Marysville, OH, needed an efficient liquid, dry and grain facility to serve the many needs of their Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Latest News
ManagementGROWMARK Meeting Visit, Company Takeover Updates, and R…
July 22, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent speaking engagement at GROWMARK’s eastern event, crop protection company merger rumors, Read More
Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
ManagementLand O’Lakes Announces SUSTAIN Business Unit, Oth…
July 20, 2016
Land O’Lakes, Inc. today announced the formal organization of a new business unit, SUSTAIN, and its leadership. SUSTAIN will focus Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Shareholder Proposes Monsanto ‘Host…
July 20, 2016
One of Bayer AG’s top 20 shareholders said Wednesday it may make sense for the life-science company to launch an Read More
Young Corn Closeup
Industry NewsNew Leaf Symbiotics Snags Former Monsanto Microbials Le…
July 20, 2016
NewLeaf Symbiotics, announced today the appointment of Dr. Janne Kerovuo as Vice President for Research and Discovery.  Dr. Kerovuo comes Read More
Corn and ditch
ManagementStudy: Saturated Buffers Reduce Nitrates From Subsurfac…
July 19, 2016
The Agricultural Drainage Management Coalition (ADMC), Agricultural Drainage Management Systems Task Force and Dr. Dan Jaynes with the National Laboratory Read More
Case sprayer nozzle closeup
EquipmentAgronomists, CCAs, Custom Applicators Invited To FSR Ag…
July 19, 2016
Agronomists, Certified Crop Advisers (CCA) and custom applicators can stay current on agronomy issues on the grounds of the Farm Read More
Soybean Field
LegislationOhio Soybean Association Names Brian Hill Legislator Of…
July 19, 2016
The Ohio Soybean Association (OSA) has announced that State Representative Brian Hill (R-Zanesville) has been named one of two Legislators of Read More
Eric SfiligojThe Latest Monsanto Rumors: A Game Of Tones
July 18, 2016
When companies are engaged in the back-and-forth of the acquisition game, the tone of their various announcements is always important. Read More
Nozzle spray close-up
AdjuvantsWest Central Distribution Introduces New Elite Family O…
July 14, 2016
West Central Distribution recently released a new line of Elite adjuvants to work alongside the new herbicide technologies that combat Read More
Bayer sign
Crop InputsBayer Makes New Offer For Monsanto
July 14, 2016
Bayer AG boosted its takeover offer for Monsanto Co. to about $65 billion in a bid to overcome the U.S. Read More
ManagementAn Update on Water
July 14, 2016
CropLife Editors Eric Sfiligoj and Matthew Grassi discuss agricultural water issues in conjunction with a recent field trip in Ohio. Read More
Co-Alliance employee
EmployeesNew Purdue Program To Focus On Talent Management
July 14, 2016
Purdue University’s Center for Food and Agricultural Business is starting a new professional development program to help food and agribusiness Read More
Industry NewsFMC Agricultural Solutions Appoints New Global Regulato…
July 14, 2016
FMC Corp. has named Andy Hedgecock as Global Regulatory Affairs Director for FMC Agricultural Solutions. He joins the company this Read More
Corn Field
Seed/BiotechWhat Can Inoculants Do For You?
July 13, 2016
When it comes to preventing disease and promoting growth in your plants, who couldn’t use a helping hand? By forming Read More
Microbes
Seed/BiotechMighty Farming Microbes: Companies Harness Bacteria To …
July 13, 2016
What if farmers, instead of picking up some agricultural chemicals at their local dealer, picked up a load of agricultural Read More