U.S. fertilizer firm CF Industries, the subject of a year-long hostile takeover attempt by Agrium, has withdrawn its own hostile takeover bid for another U.S. rival.
Chicago-based CF announced Thursday it has withdrawn its offer for Terra Industries and “is no longer pursuing the acquisition.”
CF said it has also sold its entire stake in Terra for a net gain that “more than offsets” its costs of the Terra takeover bid.
“It is clear that an acquisition of Terra now would require a significant increase in our offer, given the substantial uplift in equity values in the fertilizer sector,” CF CEO Stephen Wilson said in a release.
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“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,” he said.
“We are, of course, pleased that prospects for nitrogen and phosphate fertilizers have improved in the view of investors, a view we share.”
CF’s decision may appear as a sort of surrender to Calgary-based fertilizer and ag retail player Agrium, which has sought to buy CF since February. However, analysts such as U.S. investment bank Dahlman Rose say an Agrium-CF merger is still “by no means a certainty.”
After announcing Dec. 15 that it wouldn’t try to extend its financing for its Terra bid, CF on Dec. 21 described Agrium’s latest cash-and-stock takeover bid as “further away from being compelling than it ever has been.”
CF also continues to hold a “poison pill” over its shares. The pill, also called a “shareholders’ rights plan,” is a mechanism often put in place by hostile takeover targets to fend off an unwanted suitor. The pill, when triggered by stock purchases beyond a pre-determined level, floods the market with shares for other stockholders.
However, Dahlman Rose said in a report that it “would not be surprised to see (Agrium) become more aggressive in its pursuit of CF.”
“Objectivity”
Agrium had already announced Thursday it will put forward two “independent and highly qualified” nominees for election to CF’s board of directors, when or if CF next holds an annual shareholders’ meeting.
Agrium’s nominees, Kenny Cordell and Michael Ducey, are both former directors of U.S. ag retail firm UAP, which Agrium bought in 2008.
Apart from nominating its candidates, Agrium also said it plans to seek CF shareholder approval for a resolution that CF’s board redeem the poison pill.
Agrium also announced Thursday it has extended the deadline on its most recent CF takeover bid until midnight ET on Feb. 22. Agrium’s bid is US$45 plus one Agrium share per CF share.
“We believe CF stockholders are entitled to the opportunity to benefit from our offer which they have consistently supported,” Agrium CEO Mike Wilson said in a release.
“Accordingly, we are nominating two highly qualified, independent individuals with extensive fertilizer industry experience in an effort to bring objectivity to CF’s board.”
Canadian assets at stake in Agrium’s bid include CF’s nitrogen fertilizer facility at Medicine Hat, Alta. Also, to appease Canadian competition regulators, Agrium has arranged a deal to sell a 50 per cent stake in its fertilizer facility at Carseland, Alta. to Terra. That deal is conditional on Agrium winning control of CF.
Sioux City, Iowa-based Terra’s own Canadian assets include a nitrogen facility at Courtright, Ont., near Sarnia.
