Terra Industries Inc.’s facility in Verdigris, Okla. (Terra Industries via Bloomberg)
By Michael Oneal | Putting an end to an extended four-way takeover drama in the fertilizer
business, Deerfield-based CF Industries Holdings, Inc. announced Friday
that it had won control of rival Terra Industries Inc. in a takeover
valued at $4.7 billion.
The fertilizer giant, which has pursued Terra for more than a year,
claimed victory when Norway’s Yara International ASA, which had also
been pursuing Terra, said it wouldn’t top CF’s latest bid.
That prompted Canada’s Agrium Inc. to abandon a separate $5 billion bid for CF that it had launched last March, claiming its deal made more sense for CF shareholders than a CF-Terra merger.
Despite the hostile nature of the long takeover battle, CF Chairman Stephen Wilson sought to put that behind him.
“We are excited to begin working together to become a more competitive global fertilizer player with enhanced scale, a broader strategic platform and enhanced access to capital markets,” he said in a release.
Stockholders of Terra, which is based in Sioux City, Iowa, will receive $37.15 in cash and 0.0953 of a share of CF Industries common stock for each share of Terra common stock. The companies put a value of $4.7 billion on the deal. The boards of directors of both companies have approved the combination. The transaction has received fully committed financing from Morgan Stanley Senior Funding, Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., a release said.
Upon completion of the merger, Terra will become an indirect wholly-owned subsidiary of CF Industries, and Terra common stock will cease to be traded on the New York Stock Exchange.
Agrium CEO Michael Wilson said he was disappointed his hostile deal for CF hadn’t come through.
“We would like to thank CF stockholder for their support during our efforts to acquire CF. It is unfortunate we could not conclude this transaction, given the strong support shown by both CF and Agrium shareholders.”
Wall Street greeted CF’s announcement with a Bronx cheer. Shares of Agrium and Yara moved hired in early trading while those of CF and Terra fell.
What seems clear, however, is that the fertilizer business is on the upswing. Potash Corp. of Saskatchewan, another big fertilizer producer with its U.S. headquarters in Northbrook, said Thursday that it was revising sharply upward its outlook for the first quarter based on surprisingly strong demand for its products.
The Wall Street Journal reported Friday that rising commodity prices have sparked a flurry of recent deals in the crop-nutrient sector and that Terra has been viewed as a prize because of its focus on nitrogen-based products and because it has an expanding industrial unit to complement its agribusiness unit.
Morgan Stanley and Rothschild are acting as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to CF Industries. Credit Suisse Securities (USA) LLC is serving as Terra’s financial advisor, and Cravath, Swaine & Moore LLP and Wachtell, Lipton, Rosen & Katz are serving as legal counsel to Terra.
