CF Industries:'Comfortable' Of DOJ Clearance For Terra - CEO
January 16 2009 - 10:13AM
Dow Jones News
The chief executive of CF Industries Inc. (CF) said Friday the
company was confident of securing antitrust clearance for its
unsolicited $2.1 billion purchase of rival Terra Industries Inc.
(TRA).
The proposed all-stock deal would create the world's largest
nitrogen-based fertilizer producer by volume, but concentrate as
much as 50% of U.S. production in the enlarged company.
Terra's stock jumped by more than a quarter in early trading
Friday, maintaining the 34% premium in the offer unveiled by CF on
Thursday evening.
Stephen Wilson, chairman and CEO of Illinois-based CF
Industries, described the offer as "friendly" on a conference call
on Friday. He said it was made in a letter to the Terra board on
Thursday, but declined comment on any previous talks. In the
letter, Wilson noted Terra approached it several years ago about a
potential merger.
Terra said Friday its board will "consider and evaluate" the
bid, with CF seeking a response by Jan. 30.
Wilson said he was "comfortable" that U.S. antitrust authorities
would approve the combination. He said regulators would likely
assess the impact on the global market, despite the concentration
the two companies would produce.
Investors in the fertilizer sector have seen a boom-and-bust
cycle over the past 18 months, with stock prices doubling on
soaring demand and prices before commodity markets reversed course
from record highs in mid-2008.
CF Industries is offering 0.4235 of its own shares for each
Terra share. CF, the operator of the nation's two largest nitrogen
fertilizer plants, said its proposal wasn't contingent on
financing, though it said it may need to refinance Terra's
debt.
According to CF, the combination could generate more than $100
million in annualized cost savings and result in the world's
largest nitrogen producer by capacity. The deal is seen boosting
CF's earnings starting in the second year after closing.
Terra shares were up 25.6% at $20.46 early Friday, compared with
a 52-week high of $57.64. CF was up 1.3% at $47.85, less than a
quarter of its own 12-month peak of $172.99.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
(Mike Barris contributed to this story)
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