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CF Industries halts effort to buy Terra Industries

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DEERFIELD, Ill. (AP) — Chemical manufacturer CF Industries Holdings Inc. said Thursday it has withdrawn its offer to acquire fertilizer company Terra Industries Inc. and it is no longer pursuing the deal.

CF also said it sold all its Terra shares, with a net gain that more than offset the expenses it incurred in connection with its proposed acquisition.

CF CEO Stephen Wilson said succeeding would now require a significant increase in the offer price since fertilizer company stocks have increased in value this year.

Terra shares have risen nearly 96 percent since the end of January 2009.

Deerfield, Ill.-based CF has been pursuing a hostile acquisition of Terra since last January. Repeated offers have been turned down by Terra shareholders.

In December, CF sweetened the deal by 12 percent to $4.6 billion.

Terra shares closed Thursday up 5 cents at $32.66, but lost $3.61 in aftermarket trading.

CF shares fell $1.73, or 1.8 percent to close at $93.19. They rose $4.07 after the market closed.

“While the strategic merits of a transaction are undeniable, it is not in the best interests of CF Industries stockholders to increase our offer to the level that we believe now would be required for Terra to agree to an acquisition,” Wilson said in a statement.

CF now is likely to focus on fighting off its own hostile takeover by rival Agrium Inc.

Agrium, based in Calgary, Alberta, has pursued CF for nearly a year in an effort to block its rival’s grab for Terra, allowing CF to become the larger competitor.

In November, Agrium offered $5 billion. CF said the offer was not compelling.

On Thursday, Agrium extended the offer to Feb. 22 and said it planned to nominate two directors to stand for election at CF’s 2010 annual meeting.

Agrium also notified CF that it intends to seek CF stockholder approval for a resolution requesting that the board redeem the company’s poison pill, a mechanism that makes unsolicited takeovers more difficult.

“We remain fully committed to acquiring CF and believe the CF board of directors has failed to uphold its stockholders’ interests by continuing to ignore Agrium’s strategically and financially compelling offer, currently valued at $110.32 per CF share,” Agrium CEO Mike Wilson said in a statement.

Agrium shares fell $2.15, or 3 percent, to close at $65.32. They fell another 92 cents in aftermarket trading.

The industry’s drive for consolidation intensified at the start of the year when fertilizer company share prices had been beaten down. As the economy declined, struggling farmers scaled back demand for fertilizer, driving down prices that fertilizer companies charge as well as the price of their shares.

Share prices have recovered with an improving outlook for the industry.