Terra Rejects CF Industries’ Latest Proposal

Terra Industries’ Board of Directors, with the assistance of its financial and legal advisors, has unanimously concluded that the most recent version of CF Industries Holdings, Inc.’s unsolicited proposal dated Sept. 28, 2009, is not in the best interests of Terra or Terra’s shareholders.

“Over the last nine months, our Board has reviewed five proposals from CF — and each time the Board has unanimously determined that a combination of our companies lacks compelling industrial logic and runs counter to Terra’s strategic objectives,” said Terra President and CEO Michael Bennett.

“Terra has focused on building upon our considerable strengths as a ‘pure play’ nitrogen company. A combination with CF would threaten the value we believe we will deliver through the continued execution of our strategy,” Bennett continued.

“We believe that CF’s proposal is not strategically attractive, and fails to appropriately value Terra either on an absolute or relative basis with CF,” said Henry R. Slack, chairman of the Board of Terra. “In addition, we believe that the pending offer from Agrium creates enormous uncertainty both as to how to value CF’s acquisition currency, which we believe is inflated as a result of Agrium’s premium bid to acquire CF, and because we believe that CF shareholders are likely to prefer an Agrium transaction if they are given a choice.”

None of the proposals that CF has made to the Terra Board over the last nine months have shown any material improvement over the initial unsolicited offer that CF launched on Jan. 15, 2009. Terra’s Board has been consistent in its assessment of the flaws in the proposals and the lack of strategic or financial merit in a combination between Terra and CF.

Among the Terra Board’s reasons for rejecting CF’s proposals have been the following:

  • A combination with CF runs counter to Terra’s strategic objectives which are designed to provide substantial value differentiators to Terra’s shareholders. Terra will deliver greater value for its shareholders than CF’s proposed combination.
  • CF’s proposal is opportunistic and substantially undervalues Terra on both an absolute basis and relative to CF. Terra’s Board of Directors believes that CF’s proposal does not fully reflect the underlying fundamental value of Terra’s assets, operations and strategic plan.
  • CF’s non‐binding proposal, as well as Agrium’s pending offer for CF, create significant uncertainty for Terra’s shareholders.

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