CF Industries Rejects Agrium’s Latest Takeover Offer

Monday May 18, 2009
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More Drama In The Fertilizer Industry

CF Industries (CF) on Monday announced that its board of directors has rejected Agrium’s (AGU) latest revised offer to purchase all the outstanding shares of CF Industries.

After a review of the offer, the company determined that the offer “continues to substantially undervalue the company and is not in the best interests of CF Industries and its stockholders.”

The latest offer from Agrium adds $5.00 in cash per share, which according to CF Industries, is only $0.58 above the $4.42 per share increase in CF Industries’ cash position during the first quarter of this year.

Unfortunately for Agrium, it does not help that the market is up significantly since it made the offer.

CF Industries is also unwilling to sell, as it believes that Agrium is simply trying to act as a spoiler in CF Industries own bid to acquire Terra Industries (TRA). Agrium’s offer is conditioned upon CF Industries dropping its bid for Terra.

CF Industries made a then $2.1 billion offer to acquire Terra back on January 15 of this year. Under the terms of the offer, TRA shareholders would receive .4235 shares of CF Industries for every share of Terra that they owned. Terra’s board of directors voted to reject the offer.

The closing price of Terra on January 15 was $16.27 and the price of CF Industries was $47.23, meaning TRA shareholders would have received $20 for each of their share, a 23% premium. Since then shares of Terra have climbed to $29.36, while CF Industries’ have rallied to $82.34.

If Terra shareholders were to accept the offer today under the same terms, they would receive $34.87 in CF Industries stock, which is a premium of just 18.77%.

May 18, 2009 | Filed Under Company News, Mergers & Acquisition | Leave a Comment