In what will end a year long take-over battle, Canadian fertilizer and agricultural products distributor Agrium, Inc. (AGU, AGU.TO) announced Thursday that it will no longer pursue U.S.-based rival CF Industries Holdings, Inc. (CF), and will let its exchange offer for CF shares expire on March 22. It will also not push for the election of its nominees to the CF board.
In a statement, president and chief executive officer of Agrium, Michael Wilson said, "We would like to thank CF stockholder for their support during our efforts to acquire CF. It is unfortunate we could not conclude this transaction, given the strong support shown by both CF and Agrium shareholders. Agrium applies a disciplined approach to employing capital and will continue to focus on the significant growth opportunities available to us globally across the agricultural value chain."
Agrium has been approaching CF Industries with buy-out offers since the beginning of the year, while CF has been pursuing its rival Terra Industries, with the takeover targets unanimously rejecting all advances made until now. A combination of any two of these three companies would create one of the world's biggest nitrogen fertilizer producers.
In the three-way hostile acquisition bid, barely days after CF tabled its initial US$2.1 billion buyout bid for rival Terra Industries, Inc. (TRA) in January 2009, it found itself in the crosshairs of its bigger rival Agrium in February, with Agrium offering about US$3.6 billion to buy CF.
Agrium planned to nominate its own slate of directors for election at CF's 2010 annual shareholder meeting.On February 19, Calgary, Canada-based Agrium had extended the expiration date of its offer to acquire Deerfield, Illinois-based CF for $45.00 in cash plus one Agrium share per CF share until 12:00 midnight, New York City time, on March 22, 2010. Agrium then stated that "Agrium remains fully committed to acquiring CF and will proceed with the nomination of two highly qualified, independent individuals to CF's board of directors. The recent Yara merger agreement with Terra illustrates the important benefits of being part of a larger, global company."
Meanwhile, in a partial victory for CF in its hostile bid for Sioux City, Iowa, nitrogen producer Terra, CF succeeded in getting its slate of three nominees elected to the Terra board in November, which would have boosted its takeover attempt as all earlier attempts were repeatedly rejected. Terra board only conducts reelection for three of its eight member board in any one year.
Meanwhile, on February 15, Terra agreed to be acquired by Norwegian crop-nutrient giant Yara International ASA, the world's largest supplier of mineral fertilizers, for $41.10 per share in cash or about $4.1 billion. The deal is expected to close by the end of the second quarter.
As per the agreement with Yara, the deal may be terminated if Terra receives a superior proposal and provides advance notice, and if it does not match the superior proposal within five business days. Yara will be entitled to a $123 million break-up fee, if the agreement is terminated under such circumstances.
However, complicating matters further, Terra recently confirmed the receipt of another proposal from CF to acquire all of its outstanding common stock for $37.15 in cash and 0.0953 of a share of CF's common stock for each Terra share. The offer has a total value of $47.40 per share based on CF's closing price on March 1 and is reportedly worth about $4.7 billion.
Terra said on Wednesday that has unanimously determined that the latest proposal submitted by CF is a superior proposal to Yara, and provided it five business days notice to match the offer.
AGU closed Thursday's regular trading session at $66.78, down $1.37 or 2.01% on a volume of 2.40 million shares, higher than the three-month average volume of 2.38 million shares. In the past 52-week period, the stock has been trading in a range of $34.72 to $71.11. However, the stock gained $3.22 or 4.82% to $70.00 in after hours trading.
AGU.TO closed on the Toronto exchange at C$68.33, down C$1.72 or 2.46% on a volume of 0.86 million shares, higher than the three-month average volume of 0.82 million shares. In the past 52-week period, the stock has been trading in a range of C$41.00 to C$73.40.
CF closed at $100.61, down $2.94 or 2.84% on a volume of 2.75 million shares, higher than the three-month average volume of 1.54 million shares. In the past 52-week period, the stock has been trading in a broad range of $64.84 to $110.00. The stock further lost $4.61 or 4.58% to $96.00 in after hours trading.
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