U.S. fertilizer firm gives Agrium brush-off, again

U.S. fertilizer company CF Industries, the subject of a hostile takeover bid by Canada’s Agrium, has again rejected the bid to which 62 per cent of its shares are already reported to be tendered.

Calgary-based fertilizer and ag retail firm Agrium announced June 23 that it has 62 per cent of CF’s common shares tendered to its cash-and-stock offer.

“Contrary to Agrium’s assertions, the tender offer results do not change the facts that Agrium’s offer substantially undervalues CF Industries, our shareholders do not support the price in the offer, and the offer has significant regulatory issues,” CF CEO Stephen Wilson said in a statement later that day.

Agrium CEO Mike Wilson said in a separate statement Monday that the CF CEO’s stance contradicts recent public comments that CF is prepared to engage.

Stephen Wilson “stated to me that ‘there is no reason to meet because nothing has changed,'” Agrium’s Mike Wilson said Monday.

“Steve Wilson said he called since stockholders wanted him to engage with Agrium. I do not consider returning my phone calls to say that CF refuses to meet to be engagement and I don’t think CF stockholders will either.”

Given that 62 per cent of CF’s common shares have been tendered to Agrium’s offer of US$40 plus one Agrium share per CF share, “it is striking that CF would dismiss the results of the tender offer and refuse to make any effort to elicit additional value for their stockholders by engaging with us and demonstrating new value,” Agrium’s Wilson said.

“As we explicitly stated publicly and directly to CF stockholders, tendering shares into our offer is an unambiguous message to CF’s board in support of a transaction with Agrium. The simple fact is CF stockholders responded, and CF is ignoring them.”

“Available options”

Agrium said it’s “actively considering all available options to give the owners of CF the voice in the company they are entitled to.”

Those options don’t yet include buying the tendered CF shares. Agrium or any other company buying up a sufficiently large stake in CF would trigger the Chicago-based company’s “poison pill.”

A “poison pill” or “shareholder rights plan” is a mechanism set up by publicly traded companies seeking to fend off unsolicited takeover bids.

When triggered by a hostile bidder’s purchase of shares beyond a specific level, the targeted company swallows the pill by issuing rights to all its other shareholders to buy a massive amount of new stock, diluting the hostile bidder’s ownership stake and making a full takeover bid much more expensive.

According to Richard Downey, Agrium’s senior director for investor relations, CF is a Delaware-registered company — a status that allows it to maintain a poison pill mechanism indefinitely.

The pill, Downey said in an interview last week, “would only trigger if we tried to take up the tender.”

Agrium on June 23 extended its offer’s expiration date to midnight ET, July 22.

Canadian assets at stake in Agrium’s bid include a major nitrogen fertilizer facility CF operates at Medicine Hat, Alta.

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