CF Industries signalled a change in tack in its 11-month pursuit of Terra Industries after revealing that it had sold a big swathe of shares in its target and was not seeking an extension to a financing deal.
Stephen Wilson, the CF chairman and chief executive, said the fertilizer group would "consider alternatives available to us to advance this transaction", after failing through sweetened offers and proxy battling to land a Terra takeover.
The group had sold down its stake in Terra, a nitrogen specialist, from about 7% to "just below" 5%, the level at which greater regulatory filing responsibilities kick in.
"Future discussions or negotiations" with Terra would not be disclosed through so-called 13D filings governing larger shareholders.
CF would have booked a gain of about $11m, or 15%, on the sold shares, assuming they were sold at Tuesday's closing price.
Financing deal
CF also said it would not ask Morgan Stanley, its investment bank, to extend a financing deal due to lapse at the end of this month unless Terra agrees a deal.
The company's future ability to obtain deal financing would "depend on the credit markets and other factors at that time".
"We continue to believe that an acquisition of Terra is in the best interests of the stockholders of both companies," Mr Wilson said.
However, the group said there could be "be no assurance" that it would continue to pursue the acquisition.
'Out of the spotlight'
The statement follows Terra's rejection on Monday of CF's latest offer, worth $3.7bn now the nitrogen group has paid out $750m of its cash reserves in the form of a special dividend.
|
Highlights of CF's campaign for Terra
Dec 16: 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 |
And investors appeared to cut the chance of CF succeeding in the bid, sending its shares up 4.9% to $92.59, way ahead of other New York stocks or shares in other fertilizer groups, including Terra, which ended up 2.0% at $34.00.
CF also faces a bid from Canada's Agrium, which is dependent on the Terra deal not going ahead.
Nonetheless, analysts at Sterne Agee said that CF's moves had not altered the chances of the Terra bid succeeding.
The ditching of the Terra shares "will allow CF to pursue negotiations out of the spotlight, which may be advantageous in light of Agrium's continuing interest", the broker said.
Morgan Stanley's financing commitment was unimportant, given that CF is "financially strong".
"Were a deal to be reached, we see little reason to doubt its financing", Sterne Agee said.
It added: "With no obvious negotiating leverage... CF probably needs to re-think its strategy, and its offer. Doing that out of the spotlight should be easier."
PRINTABLE VERSION
EMAIL TO A FRIEND
RSS FEEDS