Canada-based agricultural products supplier Agrium Inc. (AGU, AGU.TO) said Monday that it remains committed to acquiring fertilizer maker CF Industries Holdings Inc. (CF) despite being rebuffed in its hostile takeover attempt. The company also noted that CF Industries has refused to meet with it despite a majority of shareholders of CF tendering their shares in its offer.
Mike Wilson, President and CEO of Agrium, said that the chairman and CEO of CF Industries, Steve Wilson, told him he would not meet with Agrium. He also quoted Steve Wilson as saying that there was no reason to meet because nothing had changed.
Mike Wilson said, "After a compelling majority of CF shares were tendered by CF stockholders in support of our offer, 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."
Wilson added, "We promised CF's stockholders that if we received a compelling majority in our June 22 tender offer we would press CF to engage with us to negotiate a mutually beneficial combination. We have reached out to the Chairman of CF's board and have been rebuffed."
Agrium said that it is "actively considering" all available options to give the owners of CF "the voice in the company they are entitled to." Further, the company said its offer is not subject to a financing condition, as it has sufficient cash resources and committed financing underwritten by Royal Bank of Canada and The Bank of Nova Scotia to fund the cash portion of the offer.
Last Tuesday, Agrium announced that stockholders of CF Industries tendered about 30.14 million CF shares, or 62% of the total outstanding CF shares, into its offer of US$40 in cash plus one Agrium common share per CF share as of the offer's expiration date. The company then extended the expiration date of the offer until July 22, 2009. The offer represents a premium of 59% to CF's closing price on February 24, 2009, the day before Agrium announced its initial proposal.
Independent proxy voting and corporate governance advisory firm RiskMetrics Group has recommended stockholders of CF Industries to tender their shares into Agrium's offer. Although a majority of CF shareholders tendered their shares in the offer, CF has a poison pill and other defense mechanisms that would prevent Agrium from going ahead with its takeover bid.
CF Industries' board and management have consistently rebuffed Agrium's takeover bid, despite Agrium sweetening its offer twice, saying that the offers undervalue the company. Instead, CF Industries is trying to acquire rival fertilizer company Terra Industries Inc. (TRA), which has repeatedly rejected those offers.
A possible merger between CF and Sioux City, Iowa-based Terra has been in the news since January 2009, when CF came up with a bid to acquire all of the outstanding shares of Terra for an estimated value of US$2.1 billion. However, barely days after CF tabled its buyout bid, the company found itself in the crosshairs of bigger rival Agrium. In February, Agrium offered to buy CF for about US$3.6 billion.
Deerfield, Illinois-based CF rebuffed Agrium's offer, terming it "grossly inadequate" and "an attempt to interfere with its own proposed business combination with Terra." Instead, the company sweetened its bid for Terra by nearly 38%. However, Terra snubbed CF's takeover bid for the second time, saying that even the revised offer substantially undervalued Terra both absolutely and relative to CF.
In mid-March, less than a month after the board of CF rejected its buyout offer, Agrium took its takeover bid directly to CF shareholders. CF urged its shareholders to reject Agrium's hostile offer. At the same time, CF's board reaffirmed its intention to pursue a business combination with the Terra and sent a letter to Terra's board of directors. However, that offer too was rejected by Terra, marking the third time the company rejected CF's offer.
CF Industries said in mid-June that it has extended the expiration date of its exchange offer for the outstanding shares of Terra common stock to Friday, July 10, 2009 from June 26 earlier. The company has said it remains committed to pursuing its long-term strategy, including its proposed business business combination with Terra.
Meanwhile, CF has launched a fight to unseat Terra's board after its takeover attempts were repeatedly rejected by that company. The company is seeking to replace three members of Terra's board of directors.
In Monday's regular trading session on the NYSE, AGU is trading at US$41.24, up US$0.84 or 2.08% on a volume of 0.69 million shares. In the past 52 weeks, the stock has been trading in a range of US$22.08-US$109.97.
On the Toronto Stock Exchange, AGU.TO is trading at C$47.27, up $0.47 or 1.00% on a volume of 0.13 million shares. The stock has been trading in a range of C$28.70-C$111.52 in the past 52 weeks.
CF is trading on the NYSE at US$76.02, down US$0.17 or 0.22% on a volume of 0.32 million shares. The stock has been trading in a range of US$37.71-US$168.14 in the past 52 weeks.
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