20 November, 2009
UPDATE 4-Terra shareholders elect CF nominees to board
* Terra shareholders back CF board nominees
* CF slate will have three of eight board spots
* Pressure on Terra to negotiate
* Terra shares up 5 pct, CF shares down 0.2 pct
(Adds vote margin, nominee names, Agrium comment, context;
updates stock prices)
By Ernest Scheyder and Michael Erman
NEW YORK, Nov 20 (Reuters) - CF Industries Holdings Inc
(CF.N) took a major step toward completing its bid to buy Terra
Industries Inc (TRA.N) on Friday when three nominees proposed
by CF were elected to Terra's board.
With its chosen slate elected, CF -- which itself is the
target of a hostile takeover effort by Agrium Inc (AGU.TO) --
may face pressure to settle a deal to buy Terra quickly, as its
financing with Morgan Stanley (MS.N) expires on Nov. 30.
Terra shares rose 5 percent to $40.03 after the vote, while
CF shares fell 0.2 percent to $82.71, both on the New York
Stock Exchange.
The vote, which is preliminary for at least five business
days, will give CF three of the eight spots on the Terra board,
which will now likely be pressed to open negotiations with CF.
Terra shareholders removed three board members, including
Chairman Henry Slack, and installed John Lilly, David Wilson
and Irving Yoskowitz. The CF slate did not attend the meeting.
"CF's really got their teeth in Terra now. I don't know if
any more evasive maneuvers are going to be all that
constructive," said Morningstar analyst Ben Johnson.
Combined, CF and Terra would create North America's largest
nitrogen fertilizer maker and the world's No. 2 nitrogen
fertilizer producer behind Norway's Yara International
(YAR.OL).
The nearly year-long, three-way takeover battle between
Agrium, CF and Terra has put the spotlight on the three
companies and the increasingly hot fertilizer sector.
The industry has been rife with both proposed and rumored
mergers, as many believe the world's growing demand for food
and biofuel will lead to sustained growth and soaring profits.
CF Chief Executive Stephen Wilson, who attended the
shareholder meeting in New York and shook hands with Terra
Chief Executive Michael Bennett after the vote was announced,
said it was time for the companies to "move forward."
"We're focused on the Terra combination," Wilson told
Reuters. "Today is an important event in that process."
Bennett -- whose seat on Terra's board was not up for vote
-- told investors CF's proposal "lacks compelling strategic
logic" and stressed a tie-up is not a foregone conclusion.
"We have not had a unanimous decision from shareholders
about anything," he said at the meeting, which was attended by
roughly 80 investors, arbitrageurs and advisers at the U.S.
headquarters of Credit Suisse (CS.N).
The preliminary vote count had the CF slate taking roughly
45 percent of the shares outstanding and Terra's directors with
around 35 percent, according to a source familiar with the
matter. As of late September, CF owned about 7 percent of
Terra's shares.
Around 85 percent of Terra's outstanding shares were voted
in the proxy fight, the source said.
The vote will give CF some breathing room in its fight
against suitor Agrium after more than 60 percent of CF
shareholders agreed to tender their shares under Agrium's $5
billion hostile offer earlier this week.
For a timeline of the so-called Agrium-CF-Terra "fertilizer
wars," visit:
here
"This makes it harder for Agrium to succeed in its bid for
CF because, as long as CF believes they can pursue Terra, they
don't have to get in bed with Agrium," Broadpoint AmTech
analyst Edlain Rodriguez said. "That said, I don't think Agrium
is going to give up that easily."
More than 60 percent of CF shares were tendered into
Agrium's nearly $5 billion offer yesterday, but CF has takeover
protections in place and can continue to stymie a deal.
"The Terra vote is irrelevant to Agrium's offer for CF,"
Agrium said in a statement. "CF's board has an obligation to
its own stockholders, who have sent a clear and unambiguous
message that they want this deal which is currently valued over
$100 per share."
A PROTRACTED TUSSLE
Deerfield, Illinois-based CF, which first moved to buy
Terra 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 whether the company reaches a deal with CF or not.
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.
Jeff Doppelt, whose family owns 186,000 shares of Terra,
called CF's latest offer a "joke" and said he would prefer an
offer in the $48 to $50 range.
Doppelt voted for CF's slate "with mixed emotions" due to
his strong confidence in Terra's management and assets.
"I voted for the concept" of a CF-Terra combination,
Doppelt told Reuters after the meeting. "However, I want
shareholders to get the best value."
Terra's current board had nominated three of its own
candidates and both sides have aggressively courted
shareholders in the past few months, all but begging for
support.
(Reporting by Ernest Scheyder and Michael Erman; Additional
reporting Euan Rocha in Toronto, additional writing by Matt
Daily; Editing by Derek Caney, Matthew Lewis, Andre Grenon and
Richard Chang)
Source: http://www.reuters.com
UPDATE 4-Terra shareholders elect CF nominees to board Added: (20.11.2009)
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