Terra Deems CF’s New Bid Superior To Yara Offer
Terra Industries said on Wednesday that it has deemed a new $4.7 billion takeover offer by CF Industries Holdings is superior to a $4.1 billion deal it had already signed with Yara International of Norway.
Terra’s move signals a potential end to the year-long fertilizer wars, which began with an earlier CF approach that Terra quickly rebuffed. The battle between the two was soon joined by Agrium, which made its own hostile bid for CF.
After CF withdrew its bid in January, Terra agreed last month to an all-cash Yara. That deal is contingent on several factors, however, including approval from the Norwegian government.
CF came back last week with its new offer and quickly kicked off a tender offer for Terra shares. The company has $4.05 billion in financing commitments from Morgan Stanley and the Bank of Tokyo-Mitsubishi UFJ, and plans to issue $1 billion in new shares to help pay for the deal.
Yara now has five business days to raise its offer for Terra. If Terra chooses to accept CF’s offer, Yara is set to receive a $123 million break-up fee.
It isn’t yet clear whether Yara will choose to raise its offer; it has said before that it does not want to get into a bidding war for Terra. The company said in a statement that its board is considering its next steps.
CF’s current bid comprises $37.15 in cash and .0953 of its own shares for each Terra share, together worth $46.74 as of Tuesday’s market close.
“We believe that Terra is worth more to CF Industries than to any other acquirer, given the strategic benefits of the transaction, including synergies, which only CF Industries can achieve,” Stephen R. Wilson, CF’s chief executive, said in a statement on Wednesday. “Any offer from Yara must be heavily discounted for the substantial risks and length of time associated with closing.”