DOW JONES NEWSWIRES
CF Industries Inc. (CF) again recommended that shareholders
reject an increased hostile bid from rival fertilizer maker Agrium
Inc. (AGU) late Sunday, again saying the deal was "grossly
inadequate."
Agrium had boosted the cash portion of its offer by 10% Friday
as it looked to build shareholder backing for the takeover.
CF Industries had already rejected an earlier offer from the
company last week. Agrium said Sunday it could raise its bid
further.
Agrium, which launched an exchange offer to CF shareholders two
weeks ago, has also said it will wage a proxy effort ahead of CF's
annual meeting next month. The moves are the latest in a three-way
battle involving Agrium, CF and Terra Industries Inc. (TRA) to
increase their market share.
The struggle 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 Friday it was boosting the cash portion of its CF
offer to $35 a share from $31.70. The stock portion of one share of
Agrium for one share of CF remains the same.
The latest offer values CF at $74.90 a share, 5.5% higher than
Agrium's initial bid of $72, or $3.6 billion in total. CF closed
Friday at $73.30 and hasn't traded premarket.
In a presentation accompanying Agrium's conference call Friday,
Agrium urged CF shareholders to withhold their votes for the
election of directors at CF's annual meeting and tender their
shares to Agrium's exchange offer "to send a clear message to the
CF board."
Last week, CF said Agrium could afford to pay $100 a share, but
during the call, Mike Wilson, president and chief executive of
Agrium, said there's no "unbiased observer" that would deem $100 a
share for CF "credible," and Agrium won't go that high.
CF said Sunday that it was confident its shareholders and
Terra's will support a proposed combination between those two
companies instead. Terra has rejected a hostile offer from CF,
which has inturn launched a proxy contest to replace three Terra
directors at its annual meeting in May.
Wilson had said CF sharehlders were telling Agrium that they
prefer to receive a premium for their shares to the "dilution and
uncertainty" a combination with Terra would bring, and that they
believe Agrium has a good track record of making acquisitions
work.
Agrium's shares closed Friday at $38.34 and Terra's closed at
$29.14. Neither has traded premarket.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com