Agrium Inc. has submitted a proposal to the board of directors of CF Industries Holdings, Inc. (NYSE: CF) to acquire all of the capital stock of CF for cash and Agrium shares at $72.00 per CF share, or a total of approximately $3.6-billion, based on yesterdayâ€™s closing price of Agrium shares.
The proposal represents a premium of 30 percent over CFâ€™s closing price on February 24, 2009, and a premium of 42 percent over the 30-day volume-weighted average share price of CF. 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 total consideration, approximately 56 percent would be in Agrium common shares and 44 percent would be in cash.
â€œThe proposed transaction is strategically compelling and a superb opportunity to create value for both Agrium and CF shareholders. Adding CFâ€™s strong North American nitrogen, phosphate and extensive crop nutrient distribution assets to Agriumâ€™s broader global wholesale and retail capabilities would greatly enhance our existing portfolio and enable us to create a premier global franchise across the entire agricultural value chain,â€� said Agrium President and CEO Mike Wilson. â€œWe will have combined revenues of nearly $14-billion and become a global leader in nutrient production and distribution. The acquisition would also triple our phosphate and UAN capacity and further strengthen all aspects of our business. We expect to achieve significant operating synergies â€“ well in excess of those contemplated in CFâ€™s proposal to acquire Terra Industries Inc. â€“ and expect the combination to provide many benefits to the customers, suppliers, and employees of both Agrium and CF, as well as the communities in which both companies operate. Furthermore, our offer presents CF stockholders a compelling opportunity for significant long-term value through their ownership in the combined company.â€�
Mr. Wilson continued, â€œImportantly, this proposed transaction will not diminish our ability to continue to build on our position as the leading North American agricultural retailer, further expand our potash capacity and advanced technologies business or pursue other strategic opportunities. We look forward to engaging with CFâ€™s board of directors to quickly reach a negotiated agreement and deliver on the exciting opportunities this combination offers to both companies.â€�
Agrium expects to realize substantial annual operating synergies of approximately $150-million from the combination within three years of closing, and CF stockholders will share in the value of those synergies through their continued ownership of 24 percent of the combined company. Agrium expects the transaction to be accretive to both earnings and cash flow in 2010 and significantly accretive on both measures in subsequent years.
The proposal is not subject to a financing condition. Agrium has sufficient cash resources and committed financing underwritten by Royal Bank of Canada and The Bank of Nova Scotia to fund the cash portion of the proposal.
RBC Capital Markets and Scotia Capital are acting as financial advisors to Agrium and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Blake, Cassels & Graydon LLP are providing legal advice.