Canada's Agrium has stepped up its campaign to snare fertilizer group CF Industries after its US rival ditched its own long-held ambitions to seal an acquisition.
Agrium, saying it remained "fully committed" to a deal, laid out the battleground it wants to fight at CF's annual meeting, naming two nominees it wants to see elected to the US group's board.
The statement followed CF's announcement that it had, after a year, withdrawn its $3.7bn offer for nitrogen group Terra Industries and was "no longer pursuing" a deal.
Agrium had made the failure of the Terra deal a condition of its $5bn offer for CF, which said its withdrawal reflected the recovery in the fertilizer sector's shares which had pushed the acquisition out of reach.
Poison pill
Agrium said it would attempt to win the election to the CF board of two former executives at United Agri Products, an agricultural retailer it bought two years ago.
The nominees, who Agrium described as "independent and highly qualified", are Kenny Cordell, UAP's former chairman and chief executive, and Michael Ducey, a former UAP director who currently sits on the boards of Verso Paper Holdings and Texas Petrochemical.
Agrium also said it would attempt to seek shareholder approval for a so-called "poison pill" clause which curbs suitors from taking up tendered shares and, in essence, prevents a takeover succeeding without the backing of the CF board.
"We believe CF stockholders are entitled to the opportunity to benefit from our offer, which they have consistently supported," Agrium chief executive Mike Wilson said.
Agrium has, twice, won support from holders of more than 60% of CF shares for its bid, with 13.8m CF shares remaining surrendered to its latest tender and not withdrawn.
Further sweetener needed
Agrium's strategy copies that of CF, which succeeded last year in getting three of its nominees voted on to the Terra board.
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End of the affair - CF's failed campaign for Terra
Jan 14 2010: announces withdrawal of bid
Dec 16 2009: says will not extend financing. Sells some of CF stake
Dec 7: raises to 0.1034 CF shares plus $36.75 cash. Terra shares worth $45.91
Nov 20: three CF nominees voted on to Terra board
Nov 1: lifts to 0.1034 CF shares plus $32.00 cash. Terra shares worth $40.61
Sep 28: says has bought 7% Terra stake
Aug 5: raises to 0.465 CF shares. Values Terra shares at about $37.50
Mar 23: amends to 0.4129-0.4539 CF shares, based on $30.50 per Terra share
Jan 15: bids 0.4235 CF shares per Terra share. Values Terra shares at $20.00
Bid values as of time of announcement |
Nonetheless, the move failed to warm Terra to the approach, despite a series of sweeteners from CF, whose last bid was more than twice as high as the initial January approach.
"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," Stephen Wilson, the CF chairman and chief executive, said.
"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."
CF said it had sold the remaining Terra shares in bought last year, booking a profit more than sufficient to cover expenses incurred in the acquisition.
'Unhealthy distraction'
CF's bid withdrawal was welcomed by analysts at Sterne, Agee & Leach, who said the Terra pursuit had become an "unhealthy distraction" and was denting its stock price by $10 a share.
"For investors in fertilizer, CF once again represents a compelling blend of highly attractive nitrogen exposure and undervalued phosphates – the two nutrients with the best outlook as we move into spring," the broker said.
Agrium's chances of success in its CF bid looked "only modestly better", Sterne Agee added.
CF shares closed 2.4% higher at $95.42 in New York, with Terra stock ending up 2.8% at $33.57.
In Toronto, Agrium shares tumbled 4.5% to Can$63.91.
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