19 November, 2009
UPDATE 4-CF shareholders back Agrium's hostile tender
* 62 pct of CF shares tendered into Agrium bid
* Vote on Terra board scheduled for Friday
* CF shares down 4.2 pct; Agrium, Terra also trade lower
(Recasts, adds CEO comment, stock action. All figures in U.S.
dollars, unless noted)
By Michael Erman and Euan Rocha
NEW YORK/TORONTO, Nov 19 (Reuters) - More than 60 percent
of CF Industries (CF.N) shares were tendered into Agrium Inc's
(AGU.TO) nearly $5 billion hostile offer for the fertilizer
maker, but the majority was not compelling enough to convince
investors that a deal is likely.
CF stock fell 3.9 percent on Thursday morning following the
results of the tender offer, lagging its competitors in the
fertilizer industry. The dip indicates that investors were
cooling on the deal's prospects, but Agrium's chief executive
hoped the tender could open talks between the two companies.
"We hope that they sit back and reflect on what's been
given to them, reflect on what their shareholders are saying
and are prepared to engage," Agrium CEO Mike Wilson said in an
interview.
"We will reach out to them today on several fronts and ask
them to sit down and have a rational, productive discussion on
the merits of our offer."
Agrium is offering $45.00 in cash plus one of its shares
for each CF share in what the company has called its best and
final offer. This implies a deal value of $101.90 per CF share,
or $4.95 billion, based on Agrium's closing stock price on
Wednesday.
The tender is likely to be overshadowed at Terra
Industries' (TRA.N) annual meeting on Friday, where CF has
nominated a slate of three directors. That vote is more likely
to determine a winner in the 10-month merger battle between
Agrium, CF and Terra.
"As we see it, CF shareowners have again failed to deliver
a unified message," said Sterne Agee analyst Mark Connelly.
"Today's result sends a clear message, and one that we think
CF's Board can pretty easily ignore given its view that the
CF-TRA combination would be highly accretive."
CF has been fending off Agrium's overtures since February
and is itself locked in a hostile campaign to acquire Terra.
A victory for CF's slate at Terra's annual meeting on
Friday would give them the upper hand in the three-way merger
battle, but would not ensure a deal with Terra. Terra has an
eight-member board and only three seats are up for election
this year.
If, on the other hand, Terra's own nominees win, Agrium's
chances at grabbing CF would likely be substantially improved.
The almost year-long saga has led some investors to label
the three-way battle the "Fertilizer Wars," or the "Ultimate
Fertilizer Championship."
Shares of CF were down $3.61 or 4.2 percent at $82.68 on
the New York Stock Exchange, while those of Agrium and Terra
were down 1.3 percent and 0.6 percent, respectively.
SPURNED BIDS
The boards of CF and Terra have repeatedly argued that the
offers tabled by their respective suitors are inadequate and
undervalue their companies.
Agrium said it has now extended its offer for CF until Dec.
18. Agrium's bid for CF is contingent on CF dropping its
pursuit of Terra.
Although 62 percent of its shares were tendered, CF can
continue to stymie a deal. The Deerfield, Illinois-based
company has a poison pill and other defense mechanisms in place
that would prevent Agrium from completing the transaction.
A similar percentage of CF shares was tendered in an
earlier Agrium bid in June, but many viewed that vote not as a
referendum on value, but on whether shareholders were
interested in a deal with the company at all.
CF on its part has also sweetened its bid for Terra and is
currently offering $24.50 in cash and 0.1034 CF share for every
Terra share. Terra's board has also declared a special dividend
of $7.50 a share, which shareholders will receive on Dec. 11
regardless of whether Terra reaches a deal with CF.
The current value of CF's bid is $33.42 without the
dividend and $40.92 with the dividend. Terra shares closed
Wednesday at $38.05.
Last week, top proxy advisory firm RiskMetrics Group
recommended Terra shareholders elect a dissident slate of
directors backed by CF.
RiskMetrics' recommendations have played a strong role in
deciding which deals win investor approval and, in some cases,
have been influential in obtaining higher deal prices for
shareholders.
However, the RiskMetrics report is in conflict with
recommendations made by three other proxy advisers. Those firms
-- Proxy Governance, Glass Lewis & Co and Egan Jones -- all
backed the Terra slate.
Interestingly, RiskMetrics also recommended that CF
shareholders should tender their shares into Agrium's hostile
bid for CF, saying the offer is "compelling enough to at least
earn a seat at the negotiation table."
(Editing by Lisa Von Ahn, Dave Zimmerman and Matthew Lewis)
Source: http://www.reuters.com
UPDATE 4-CF shareholders back Agrium's hostile tender Added: (19.11.2009)
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