Agrium goes to CF shareholders with bid

Calgary fertilizer and farm retail firm Agrium will put its pitch for a takeover of CF Industries directly to the U.S. fertilizer firm’s shareholders.

Agrium on Monday issued an exchange offer to CF Industries’ stockholders, worth either US$31.70 in cash and an Agrium share for each CF share, a swap worth 1.79 Agrium shares per CF share, or US$72 cash.

Chicago-based CF, in a letter rejecting Agrium’s offer last week, called the Canadian firm’s bid “a transparent attempt to interfere with CF Industries’ proposed business combination” with Terra Industries, another major U.S. fertilizer company, based in Iowa.

CF, in pursuing its unsolicited bid for Terra, announced last Thursday it would use its stake in Terra to nominate three independent members to the Terra board at Terra’s as-yet unscheduled annual shareholders’ meeting.

With that in mind, Agrium CEO Mike Wilson said Monday, “CF’s refusal to engage in discussions with Agrium left us with no choice but to take our offer directly to CF stockholders.

“We believe CF’s restructuring of its offer for Terra to circumvent a vote by its own stockholders highlights their belief that CF would lose a stockholder vote and demonstrates a disregard for the rights of their stockholders.”

Wilson said Agrium believes its bid for CF to be a “far superior alternative” for CF shareholders, “as they receive a premium rather than pay a premium to Terra stockholders.”

As well, Wilson said, Agrium would be prepared to increase its offer “to reflect additional value that the CF board and management can demonstrate arising from the combination of our two companies.”

Agrium noted its offer is not subject to any financing conditions, as it has “sufficient cash resources” as well as financing arranged with RBC and Scotiabank.

CF Industries’ assets include major nitrogen fertilizer plants at Medicine Hat, Alta. and Donaldsonville, La.; phosphate mining and manufacturing operations in central Florida; and a system of fertilizer terminals, warehouses and “associated transportation equipment,” mostly in the U.S. Midwest. It also has a 50 per cent stake in KeyTrade AG, a global fertilizer trading company based near Zurich, Switzerland.

Terra Industries’ assets include a major nitrogen fertilizer plant at Courtright, Ont., south of Sarnia. Terra’s other plants are in Iowa, Oklahoma and Missouri; it also owns an ammonia, urea and melamine crystal production facility at Donaldsonville, about 60 km south of Baton Rouge.

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