Extending the long drawn-out acquisition battle, fertilizer maker CF Industries Holdings, Inc. (CF) Friday said its board of directors rejected agricultural nutrients maker Agrium Inc.'s (AGU, AGU.TO) latest revised proposal to acquire all outstanding shares of the company. Agrium has been approaching CF with buy-out offers since the beginning of the year, while CF has been trying to purchase rival Terra Industries Inc. (TRA).
On November 5, Agrium once again sweetened its hostile offer to buy CF, its third offer revising the cash portion, this time offering $45 in cash plus one Agrium share per CF share. The offer has a total value of $92.99 per share based on its closing stock price on November 4, which marks an increase of $5.00, or 12.5%, in the cash consideration. The offer provides a premium of over 67% to CF's closing price on February 24, the day before Agrium announced its initial proposal, and about 84% to CF's 30-day volume weighted average price through that date.
Agrium also said on Thursday that it has received anti-trust clearance from Canadian authorities and will clear the U.S. regulatory approval shortly.
Agrium President and CEO Mike Wilson said on Thursday, "This is Agrium's best and final offer. We have addressed all Canadian and U.S. regulatory concerns and are prepared immediately to execute a fully financed, binding merger agreement. Given that CF has consistently refused to engage with us, this is CF stockholders' final opportunity to make it clear to the CF board that they want to receive a premium rather than pay one."
However, CF said today that following a review of Agrium's latest revised proposal with management and its legal and financial advisors, the board of directors concluded that the offer continues to substantially undervalue the company and is not in the best interests of CF Industries and its stockholders.
Stephen Wilson, chairman, president, and chief executive officer of CF Industries, said, "Agrium's latest revised offer is very far from compelling. Our board and management team are committed to delivering superior value to our stockholders. We have a long history of generating value for our stockholders and we will continue to execute our long-term strategy, including the company's offer to acquire Terra Industries."
Just as Agrium is interested in CF, the fertizer producer has been approaching Terra with revised offers. Since January 2009, CF Industries has made six separate proposals to acquire Terra, each of which was unanimously rejected by Terra Board as not in the best interests of Terra shareholders. CF also launched a fight to unseat Terra's board and is seeking to replace three members of Terra's board.
On November 1, CF sweetened its bid again offering $32 in cash and 0.1034 of a CF share for each share of Terra. However, Terra unanimously brushed aside the offer indicating the proposal as inadequate, opportunistic and not in the best interests of Terra and its shareholders. Terra once again urged its shareholders to reject CF's merger proposal.
A combination of any two of these three companies would create one of the world's biggest nitrogen fertilizer producers.
Recently, Agrium reached an agreement with Terra to divest to Terra 50% of Agrium's ammonia and urea production complex in Carseland, Alberta. Agrium and Terra have also agreed to a five-year supply contract in which Terra will receive a minimum of 60,000 metric tonnes of urea per year.
Morgan Stanley and Rothschild are acting as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to CF Industries.
CF closed Thursday's regular trade at $79.90, down from the previous close of $86.39, on 6.18 million share.
AGU shares settled at $49.81 on Thursday, up from Wednesday's close of $47.99, on 5.84 million shares.
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