CF Industries Ups Terra Ante

CF Industries Holdings, Inc. has updated its offering to Terra Industries Inc. shareholders, sweetening the pot with cash. All prior offers had been in stock only.

On Nov. 1, the company offered  $32.00 in cash and 0.1034 of a share of CF Industries common stock for each Terra share (including the $7.50 per share special dividend declared by Terra). The offer has a value of $40.61 per share, based on the Oct. 30 closing price for CF Industries common stock. The offer is equivalent to a multiple of 7.1 times trailing 12-months EBITDA (earnings before interest, taxes, depreciation, and amortization). It represents a premium of 28 percent to Terra’s closing price on Friday, Oct. 30 and a significantly higher premium (40 percent) to the price at which Terra shares would have traded without takeover speculation, according to CF Industries.

Morgan Stanley has committed $2.5 billion to provide the funds required for the transaction. The transaction is not subject to a financing condition and is not subject to the approval of CF Industries stockholders. CF Industries has satisfied all antitrust regulatory conditions that are required to close the transaction.

“The strategic benefit of combining these two great companies is undeniable,” says Stephen R. Wilson, chairman, president, and CEO of CF Industries. “The substantial cash in our offer makes the combination far more accretive for CF Industries stockholders, while providing certainty on value and closing for Terra stockholders. The transaction is clearly in the best interests of our respective stockholders.”

The offer is good through Nov. 30, and CF Industries can extend the offer until Dec. 31. CF Industries also can withdraw its current offer if a merger agreement is not entered into by Nov. 30. CF Industries has been pursuing a deal with Terra since January 2009. Meanwhile, Agrium Inc. has been trying to buy CF Industries since February.

In an Oct. 27 letter to Terra stockholders, CF Industries asked the stockholders to vote for the three independent nominees CF has chosen to Terra’s Board of Directors. Terra’s annual meeting will be held Nov. 20.

CF Industries also sent a letter to Terra Industries’ Board of Directors on Nov. 1.

(Sources: CF Industries, Dow Jones Newswires)

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