CF Board Rejects Agrium's Bid, May Raise Offer For Terra

   DOW JONES NEWSWIRES 
 

CF Industries Holdings Inc. (CF) said its board has rejected a takeover offer from Agrium Inc. (AGU) and that it will continue to pursue a combination with Terra Industries Inc. (TRA) instead.

The fertilizer maker CF said it was prepared to raise its offer for Terra so long that the companies can agree to a deal.

CF's shares were down 5.7% at $57.13 in premarket trading, while Agrium shares were down 0.7% at $31.20 in premarket trading. Terra shares were unchanged from Friday's closes of $26.11.

In a letter to Agrium's board, CF said the bid, initially valued at $3.6 billion in cash and stock, was "grossly inadequate." The Agrium offer was a 30% premium over CF's closing price the day before the deal was announced. A deal would boost Agrium's wholesale business and result in the world's fourth-largest fertilizer producer.

CF had said last month its long-term fundamentals remain strong, but high inventories in the supply chain and uncertainty about crop acreage could hurt its performance heading into the spring planting season.

Meanwhile, Terra has been fighting off CF's advances, saying the roughly $2.7 billion offer wasn't in its shareholders' best interests. Directors added that because of the Agrium offer, CF's shareholders weren't likely to approve CF's proposed acquisition of Terra.

Terra also said the two companies had vastly different strategies, including CF's higher dependence on agricultural urea and ammonia sales, an area Terra has moved away from.

In a letter to Terra's board Monday, CF said it would be willing to raise its offer to as high as 0.4539 share of CF for each share of Terra as it looks to value Terra at $27.50, a 5.3% premium to Friday's closing price. CF's current offer was 0.4252 share, which when initially offered was seeking to value Terra at $20 each. But CF's offer could fall to as low as 0.4129 share.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; [e-mail]