M&A

20 November, 2009

Terra, CF battle goes to shareholders' vote

* Terra shareholders meet in New York

* Board vote could set stage for CF buyout

By Ernest Scheyder

NEW YORK, Nov 20 (Reuters) - Terra Industries Inc's (TRA.N) shareholders will vote Friday on a slate of new board members, and the outcome of rival CF Industries Holdings Inc's (CF.N) proposed buyout could hang in the balance.

At Terra's annual shareholders meeting in New York, CF will nominate three candidates for the company's board.

CF, which itself is the target of a hostile takeover effort by Agrium Inc (AGU.TO), hopes the election of its candidates will clinch de facto support for its proposed acquisition of Terra.

Deerfield, Illinois-based CF, which first moved to buy the company last January, is currently offering $24.50 in cash and 0.1034 of a share for every Terra share.

Terra's incumbent board has also declared a special dividend of $7.50 a share, which stockholders will receive on Dec. 11 regardless of whether the company reaches a deal with CF.

The current value of CF's bid is $33.07 without the dividend and $40.57 with it. Including the dividend, the deal is worth roughly $4.05 billion, based on Thursday's close.

Terra's current board has nominated three of its own candidates, and both sides have aggressively courted shareholders in the past few months, all but begging for support.

"Don't support CF's inadequate proposal," Sioux City, Iowa-based Terra entreated shareholders on Thursday, saying the offer was "opportunistic" and "not in the best interests of Terra shareholders."

CF, for its part, stressed the premium it says it is offering.

"Your vote will determine whether you will have the opportunity to receive a significant premium or you will lose that opportunity," CF Chief Executive Stephen Wilson told Terra shareholders.

If its nominees are elected, CF may be under pressure to settle a deal quickly, as its financing with Morgan Stanley (MS.N) expires on Nov. 30.

Friday's shareholder meeting comes a day after more than 60 percent of CF shares were tendered in favor of Canadian rival Agrium's nearly $5 billion hostile bid. [ID:nN19158693]

In premarket trading shares of Terra and its suitor CF were both unchanged from Thursday's closing prices. (Reporting by Ernest Scheyder; Editing by Lisa Von Ahn)

Source: http://www.reuters.com