CF Industries, Terra Agree to $4.7 Billion Merger
By Christopher Donville and Serena Saitto
March 12 (Bloomberg) — CF Industries Holdings Inc. will acquire Terra Industries Inc. for about $4.7 billion after topping a bid from Yara International ASA and fending off its own hostile suitor during a yearlong takeover battle.
Terra agreed to the offer of $37.15 in cash and 0.0953 of a share of CF Industries common stock for each Terra share, the companies said today in a statement.
CF won the agreement after more than doubling its original $2.1 billion offer from January 2009 as it sought to create the world’s second-largest publicly traded maker of nitrogen-based fertilizers. Oslo-based Yara, the largest, had also bid for Terra and today said it wouldn’t increase its offer to top CF’s bid. Yara may get a $123 million breakup fee from Terra.
“The new CF will be a formidable company, though the global nitrogen business remains very fragmented,” Edlain Rodriguez, an analyst at Broadpoint AmTech in New York, said today in a telephone interview.
Deerfield, Illinois-based CF also fended off its own hostile suitor. Calgary-based Agrium Inc. yesterday said it would allow a $5.43 billion offer for CF to expire.
CF fell $3.88, or 3.9 percent, to $96.73 at 4:15 p.m. in New York Stock Exchange composite trading. Sioux City, Iowa- based Terra declined 57 cents, or 1.2 percent, to $46.33. Agrium rose C$5.09, or 7.4 percent, to C$73.42 in Toronto.
Nitrogen Competition
Before today, the world’s five-largest nitrogen producers controlled about 13 percent of global ammonia production capacity, Rodriguez said. That compares with 47 percent of phosphate capacity held by the top five producers and 65 percent for makers of potash, he said.
“These are two companies that are complementary, that should be together,” CF Chief Executive Officer Stephen R. Wilson said in an interview. “I’m excited by the fact that we are really doing it — we are doing it for the benefit of our stockholders.”
CF is paying about 6.53 times Terra’s net income, according to data compiled by Bloomberg. Acquisitions in the agricultural chemicals industry announced in the past year were at 3.91 times net income, according to the median multiple of 83 deals.
The transaction is expected to close in about 30 days.
Wilson said there may be a role for Terra Chief Executive Officer Michael Bennett in the combined company.
‘Very Interested’
“I know with some degree of confidence that Mike will be very interested in working with me to create the best CF Industries we can going forward,” Wilson said the interview.
Joe Ewing, a spokesman for Terra, wasn’t immediately available to comment.
Credit Suisse Securities LLC is serving as Terra’s financial adviser, and Cravath, Swaine & Moore LLP and Wachtell, Lipton, Rosen & Katz are serving as legal counsel to Terra.
CF’s financial advisers are Morgan Stanley and Rothschild Inc., while Skadden, Arps, Slate, Meagher & Flom LLP is serving as the company’s legal counsel.
–Editors: Steven Frank, Kevin Orland.
To contact the reporters on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net; Serena Saitto in New York ssaitto@bloomberg.net.
To contact the editor responsible for this story: Kevin Miller at kmiller@bloomberg.net.