Terra, CF match moves in high-stakes fertilizer match
CF Industries, looking to bolster its bid for rival fertilizer maker Terra Industries, announced today it had purchased 5 percent of Terra shares in the open market.
Deerfield, Ill.-based CF also released a draft of a proposed merger agreement between the two companies.
“With the draft merger and share purchases, CF is really saying, ‘We’ve set the table, the food is cooking, and we expecdt you to sit down to negotiate. CF is clearly not going away,” Louis Meyer, an analyst at Oscar Gruss & Son in New York, told Bloomberg News,.
CF’s latest salvo follows two moves last Thursday by Terra aimed at making the Sioux City-based company less attractive for a takeover. Terra said it would return $750 million to shareholders in a special cash dividen, issue an additional $600 million in debt and buy back $300 million in senior notes.
Ben Johnson, a senior analyst with Morningstar, said Terra is “clearly taking a lesson from the noble blowfish in an attempt to ward off a predatory bid.”
“When the dust settles, Terra would have approximately $500 million of cash in the bank and move from a net cash position of about $6.74 per share (as of June 30) to holding approximately $100 million in net debt on its balance sheet,” Johnson wrote on Morningstar’s Web site last Friday.
“This course of action simultaneously makes Terra look less appetizing to CF while taking care of Terra’s own shareholders in a manner that is palatable and in which Terra maintains its solid financial footing.”
Tags: Agrium, annual meeting, CF, dividend, fertilizer, proxy vote, Sioux City, takeover, Terra