Norway's Yara Says It Won't Raise Terra Bid; Shares Rise

Norway's Yara International ASA (YAR.OS) Friday said it won't raise its $4.1 billion bid for U.S. fertilizer producer Terra Industries Inc. (TRA), which was trumped last week by CF Industries Holdings Inc. (CF).

The news gave a boost to Yara's shares. At 0849 GMT, they traded up 5.7% at 252.90 Norwegian kroner ($43.30). Yara's shares have risen 71% in the past 12 months, underperforming the 78% gain in the wider Oslo market.

"This is obviously positive news," an Oslo-based analyst said, adding that investors had started to anticipate that Yara would walk away.

Wednesday, Yara said it had received a notification from Terra saying that the proposal from CF is, in Terra's view, "a superior proposal to the merger agreement signed by Yara and Terra."

The merger agreement can be terminated under certain circumstances. Yara would be entitled to a $123 million breakup fee.

Jorgen Ole Haslestad, president and chief executive of Yara, which is already one of the world's largest fertilizer producers, Friday said that Terra would be "a perfect fit to Yara," and attractive at Yara's proposed valuation.

"But we will not increase our offer that was first accepted by the Terra board," Haslestad said.

Rising commodity prices have sparked a flurry of deals in the crop-nutrient sector lately. Terra's focus on nitrogen-based products has kept it among the most attractive operators, as it's prized as a U.S. focused pure-play on nitrogen-based products with an expanding industrial unit complementing its agribusiness interests.

CF Industries' offer for Terra is worth $4.72 billion, compared with Yara's all-cash $4.1 billion bid in February.

Terra had already fought a yearlong pursuit from U.S. rival CF Industries before accepting Yara's bid last month. CF Industries is still defending itself against a hostile approach from Canada's Agrium Inc. (AGU).

The global fertilizer market is recovering from a two-year boom-and-bust, triggering a series of efforts to tap improving supply and demand conditions. Nitrogen prices have been far more resilient than those for phosphate and potash, which are also used to produce crop nutrients.

-By Karl Bruze, Dow Jones Newswires; 46 8 545 130 95; [e-mail]