M&A

11 November, 2009

UPDATE 1-Two proxy advisors back Terra directors

* Proxy Governance, Egan Jones backs Terra director slate

* Rival CF Industries has put a slate up for election

NEW YORK, Nov 11 (Reuters) - Two leading proxy advisory firms recommended Terra Industries Inc (TRA.N) shareholders vote for the slate of directors the company has put up for election to its board rather than a competing slate nominated by CF Industries Holdings Inc. (CF.N)

Fertilizer maker CF Industries launched a hostile bid for rival Terra in January and has put three directors up for election to the company's board in order to further that bid. CF is itself fending off a hostile offer from Canada's Agrium Inc. (AGU.TO)

Proxy Governance backed Terra's slate in a report dated Nov. 11, while Egan Jones backed the same slate earlier this week, according to the reports.

"While the CF buyout proposal does offer a premium to the unaffected (and even to current) trading prices, the offer itself, as the board has argued, appears to undervalue the company's existing business as well as its strategic prospects," Proxy Governance said in its report.

The firm argued that a combination of CF and Terra would lose some of the benefits of Terra's nitrogen-centered business plan.

Top proxy advisory firm RiskMetrics had not yet released its recommendation on the deal. Shareholders are set to vote on the board at Terra's annual meeting on Nov. 20. (Reporting by Michael Erman; editing by Carol Bishopric)

Source: http://www.reuters.com