CF Industries Holdings Inc.: Acquisition Bid From Agrium Intensifies

Once the suitor of rival Terra Industries, CF Industries Holdings Inc. now turns its focus to fending off a hostile takeover bid from Canadian fertilizer maker Agrium.

CF Industries had pursued Terra for a year before withdrawing its bid Jan. 14. At the same time, CF Industries has been an acquisition target of Agrium, which stepped up its efforts to purchase CF Industries after the company announced it would no longer pursue Terra.

The moves are part of an industrywide consolidation effort that began during the economic downturn as decreased demand from farmers lowered fertilizer prices.

CF Industries said it sold all its Terra shares, with a net gain that more than offsets expenses it incurred from its proposed acquisition of Terra.

"It is clear that an acquisition of Terra now would require a significant increase in our offer, given the substantial uplift in equity values in the fertilizer sector," said Stephen R. Wilson, chairman, president and chief executive officer of CF Industries. "While the strategic merits of a transaction are undeniable, it is not in the best interests of CF Industries stockholders to increase our offer to the level that we believe now would be required for Terra to agree to an acquisition. We are, of course, pleased that prospects for nitrogen and phosphate fertilizers have improved in the view of investors, a view we share."

CF Industries Holdings Inc. At A Glance CF Industries Holdings Inc. Deerfield, Ill. Primary Industry: Chemicals Number of Employees: 1,600 2008 In Review Revenue: $3.92 billion Profit Margin: 17.46% Sales Turnover: 1.64 Inventory Turnover: 6.58 Revenue Growth: 42.24% Return On Assets: 34.02% Return On Equity: 57.68%

"Calgary, Alberta-based Agrium said shortly after CF Industries dropped its bid for Terra that it would nominate two independent directors to the CF board and seek stockholder approval to remove CF's "poison pill" stockholders' rights plan.

"We remain fully committed to acquiring CF and believe the CF board of directors has failed to uphold its stockholders' interests by continuing to ignore Agrium's strategically and financially compelling offer," Agrium President and CEO Mike Wilson said in a statement.

Agrium began pursuing CF Industries in February 2009, shortly after CF announced its intent to buy Terra. Agrium initially offered $72 per share for a total of approximately $3.6 billion. CF Industries' board rejected the bid.

In November, Agrium increased its offer to $97 a share, or $5 billion total, which CF Industries also rejected, saying "Agrium's offer is further away from being compelling than it ever has been."

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