Thursday, agricultural nutrients maker Agrium Inc. (AGU, AGU.TO) said it has once again sweetened its its hostile offer to buy fertilizer maker CF Industries Holdings, Inc. (CF), with the latest offer of $45 in cash plus one Agrium share per CF share.
Agrium's latest offer has a total value of $92.99 share based on its closing stock price on November 4, representing 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.
Further, Agrium said it has extended the expiration date of the exchange offer to November 18.
The Calgary, Alberta-based Agrium said that its offer is not subject to a financing condition. The company also said it has sufficient cash resources and committed financing underwritten by Royal Bank of Canada and Bank of Nova Scotia to fund the cash portion of the offer.
As of November 4, Agrium said that about 8.6 million shares of common stock of CF Industries had been tendered and not withdrawn from the exchange offer.
Agrium President and CEO Mike Wilson said, "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."
Further, Agrium said that it has received anti-trust clearance from Canadian authorities and will clear the U.S. regulatory approval shortly.
Recently, Agrium reached an agreement with Terra Industries Inc. (TRA), under which Agrium will 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.
As a reaction to the latest offer, CF said it will review the latest revised proposal and will decide if go with the offer.
A possible merger between CF Industries and rival Terra Industries has been in the news since January 2009, when CF Industries came up with a bid to acquire all of the outstanding shares of Terra for an estimated value of $2.1 billion.
However, barely days after CF industries tabled its buyout bid for Terra, the company found itself in the crosshairs of bigger rival Agrium. CF had rebuffed Agrium's buyout offer earlier this month, terming it "grossly inadequate" and "an attempt to interfere with its own proposed business combination with Terra."
The same day, CF 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 Industries rejected its buyout offer, Agrium took its takeover bid directly to CF shareholders. At that time, Agrium said that it has commenced an exchange offer to acquire all outstanding shares of CF Industries at an exchange ratio of 1.0 common share of Agrium common stock plus $31.70 in cash. The company also said that CF stockholders will also have the option of electing to receive for each CF share either 1.7866 common shares of Agrium, or $72 in cash, subject to proration.
However, CF Industries urged its shareholders to reject Agrium's hostile offer to acquire the company. At the same time, the CF board reaffirmed its intention to pursue a business combination with the Sioux City, Iowa-based Terra Industries and sent a letter to Terra's board.
The company sweetened its deal to acquire Terra by offering to pay $30.50 for each Terra share, with an exchange ratio between 0.4129 and 0.4539 of a CF Industry share. However, that offer was rejected by Terra a day later, marking the third time that the company has rejected CF Industries' offer.
Meanwhile, CF Industries has also 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.
Later in April, Agrium raised its offer to buy all of the common stock of CF for $35 in cash plus one Agrium common share for each CF common share.
A month later, Agrium sweetened its bid for CF where CF stockholders were offered $40 in cash, an increase of $5, or 14.3%, in the cash consideration, and one common share of Agrium for each CF share.
On November 1, CF Industries sweetened its offer to $32.00 in cash and 0.1034 of a share of CF common stock for each Terra share, valuing Terra at $40.61 per share or about $4.1 billion. However, Terra unanimously brushed aside the offer indicating the proposal as inadequate, opportunistic and not in the best interests of Terra and its shareholders. In the due course, Terra once again urged its shareholders to reject CF's merger proposal.
So far, 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.
AGU is currently trading at $49.41, up $1.42 or 2.96%, on the NYSE, while AGU.TO is currently trading at C$52.41, up C$1.18 or 2.30%, on the Toronto Stock Exchange.
TRA is currently trading at $35.92, up $0.38 or 1.07%, on the NYSE.
CF is currently trading at $79.38, down $7.01 or 8.11%, on the NYSE.
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