CF Industries willing to raise its Terra offer

[August 05, 2009]  DEERFIELD (AP) -- CF Industries Holdings Inc. said Wednesday that it is willing to boost its bid for Terra Industries Inc. after its two earlier takeover offers were rejected.

The Deerfield-based fertilizer company, which is considering its own takeover offer from Agrium Inc., said it would raise its fixed exchange ratio to 0.465 shares of CF Industries for each Terra common share.

Its March bid proposed $30.50 for each Terra share with an exchange ratio between 0.4129 and 0.4539, or about $2.2 billion.

That was up from a January offer at an exchange ratio of 0.4235 shares of CF Industries per common share of Terra, or $2.1 billion.

"We continue to believe firmly that a business combination with Terra is the best way to create stockholder value and is in the best interests of both CF Industries and Terra stockholders," CF Chairman, President and CEO Stephen R. Wilson said in a statement.

The sweetened bid would also return at least $1 billion in cash to shareholders of the combined company once the proposed deal closes and would distribute 5 million contingent future shares to CF stockholders. The contingent shares would be converted into CF stock if the stock trades at more than $115 per share over a certain period after the potential transaction's completion.

CF, which expects the proposed bid to produce annual cost savings of $105 million to $135 million, says it has had regular contact with Terra stockholders since its initial offer in January.

An exchange offer that was set to expire on Friday has been extended until Aug. 21. CF said about 9.1 million shares of Terra stock had been tendered in the exchange offer as of Tuesday.

CF Industries Holdings is the holding company for CF Industries Inc., which produces and distributes nitrogen and phosphate fertilizer products. While trying to potentially buy Terra, CF is also considering a takeover bid for its operations from rival Agrium.

Last month Canadian-based Agrium extended a deadline for CF to decide on its offer. CF shareholders have until midnight Aug. 19 to decide on a proposal that include $40 in cash plus one Agrium share per CF shares.

CF has consistently resisted the takeover attempt, saying Agrium is undervaluing the company.

[Associated Press]

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