2nd UPDATE: Agrium Boosts CF Bid, But Offer Still Lags Shares
May 11 2009 - 10:50AM
Dow Jones News
Agrium Inc. (AGU) said it sweetened its hostile offer for rival
fertilizer maker CF Industries Inc. (CF) to around $4.1 billion
Monday, though it target's share price continued to lag the revised
terms.
The Canadian predator also extended the expiration of its bid by
almost a month until June 15, after the scheduled close of CF's own
unsolicited bid for smaller U.S. rival Terra Industries Inc.
(TRA).
Agrium's CEO, Mike Wilson, and the company's advisors have
sought talks with CF, according to people close to the situation,
though no meetings are planned.
The three-way tussle, now in its fourth month, has seen CF
reject Agrium's approaches, and cast them as an effort to disrupt
its own pursuit of Terra and prevent consolidation in the wholesale
fertilizer sector.
Agrium, a leading retail distributor, boosted the cash component
of its offer to $40 a share from $35, plus one of its own shares
for each CF share, valuing the package at $85.20 based on May 8
closing prices.
CF shares continue to trail the offer, recently trading up 1.4%
at $74.86. Agrium shares were down 1.6% at $44.49.
While Agrium touted a 53% premium to its own pre-bid level in
February, the broader fertilizer sector has strengthened in recent
weeks after a prolonged period of weak demand and high raw material
costs.
CF acknowledged receipt of the bid and said its board "will
evaluate the revised proposal carefully."
Terra, the smallest of the trio, has rejected CF's approaches
and also pushed back the date of a shareholder vote from May until
at least June 8.
The two sides had not engaged in any discussions prior to CF's
annual meeting last month, where Agrium had urged CF shareholders
to withhold their votes from the board's slate. Both sides claimed
victory, with the three directors re-elected by more than 75% of
shareholders, while Agrium had sought to dissuade at least 20% from
backing the slate.
Meanwhile, CF has made its own bid for a third peer, Terra
Industries Inc. (TRA). CF has continued to call Agrium's offer
"grossly inadequate."
The jockeying for position comes as fertilizer producers look to
take advantage of the drop in sector stock prices since last summer
to buy up production capacity ahead of an expected rebound in
prices.
Agrium said as of midnight May 8, 1.3 million of CF's 49.1
million shares outstanding had been tendered.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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