On Tuesday, hostile bidder CF Industries Holdings Inc. (NYSE:CF)
sent a letter directly to Terra Industries Inc. (NYSE:TRA) telling it to vote in favor of the three proposed independent nominees to Terra's board on Nov. 20. CF Industries pointed out its new $4.1 billion offer for the fertilizer rival
now includes a cash component and $2.5 billion in financing from Morgan Stanley (NYSE:MS).
On Wednesday morning, Sioux City, Iowa's Terra gave a list of reasons why its board and financial advisers
unanimously rejected the new Nov. 1 proposal as "inadequate, opportunistic and not in the best interests of Terra and its shareholders."
Among the reasons, it pointed out Terra's ability to "continue to make strategic and opportunistic acquisitions" that build shareholder value, such as Terra's pending acquisition of a 50% interest in Agrium Inc.'s (NYSE:AGU) Carseland nitrogen manufacturing facility for $250 million and its acquisition of Mississippi Chemical Corp.
Canadian fertilizer maker Agrium agreed to the Carseland deal as part of its own hostile bid to acquire CF Industries for about $4.7 billion, or 1 Agrium share and $40 in cash per CF share. Agrium does not want to see CF and Terra combine.
According to The Deal Pipeline (subscription required), the
relatively large spread on the potential Terra deal reflects concerns that Agrium will make a blowout bid for CF Industries before the Terra meeting date. Terra also said in its letter, "CF's Nov. 2 presentation justifies its inadequate proposal using a 2010 Ebitda estimate for Terra of $525 million, which is in fact significantly less than Terra's projection of approximately $694 million." -
Baz HiralalSee CF's letter to Terra shareholdersSee Terra's Nov. 4 rejection letterGo to The Deal Pipeline story
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