CF Industries:'Comfortable' Of DOJ Clearance For Terra - CEO

The chief executive of CF Industries Inc. (CF) said Friday the company was confident of securing antitrust clearance for its unsolicited $2.1 billion purchase of rival Terra Industries Inc. (TRA).

The proposed all-stock deal would create the world's largest nitrogen-based fertilizer producer by volume, but concentrate as much as 50% of U.S. production in the enlarged company.

Terra's stock jumped by more than a quarter in early trading Friday, maintaining the 34% premium in the offer unveiled by CF on Thursday evening.

Stephen Wilson, chairman and CEO of Illinois-based CF Industries, described the offer as "friendly" on a conference call on Friday. He said it was made in a letter to the Terra board on Thursday, but declined comment on any previous talks. In the letter, Wilson noted Terra approached it several years ago about a potential merger.

Terra said Friday its board will "consider and evaluate" the bid, with CF seeking a response by Jan. 30.

Wilson said he was "comfortable" that U.S. antitrust authorities would approve the combination. He said regulators would likely assess the impact on the global market, despite the concentration the two companies would produce.

Investors in the fertilizer sector have seen a boom-and-bust cycle over the past 18 months, with stock prices doubling on soaring demand and prices before commodity markets reversed course from record highs in mid-2008.

CF Industries is offering 0.4235 of its own shares for each Terra share. CF, the operator of the nation's two largest nitrogen fertilizer plants, said its proposal wasn't contingent on financing, though it said it may need to refinance Terra's debt.

According to CF, the combination could generate more than $100 million in annualized cost savings and result in the world's largest nitrogen producer by capacity. The deal is seen boosting CF's earnings starting in the second year after closing.

Terra shares were up 25.6% at $20.46 early Friday, compared with a 52-week high of $57.64. CF was up 1.3% at $47.85, less than a quarter of its own 12-month peak of $172.99.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; [e-mail]

(Mike Barris contributed to this story)

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