Canadian fertilizer firm Agrium has picked up U.S. antitrust regulators’ approval for its proposed hostile takeover of U.S. rival CF Industries, provided Agrium can first shed some U.S. fertilizer assets.
Now, if only Agrium could get approval from CF’s board of directors, the Calgary company said Wednesday.
The U.S. Federal Trade Commission has granted Agrium an early termination of its “waiting period” under that country’s Antitrust Improvements Act (commonly called the Hart-Scott-Rodino Act), and accepted for public comment a consent agreement drafted by FTC officials and Agrium.
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“The proposed consent order settles charges that the acquisition (of CF by Agrium) would have eliminated competition in the market for anhydrous ammonia fertilizer, a product that farmers rely on to grow their crops,” the FTC said in a release Wednesday.
If Agrium succeeds in buying Chicago CF, the FTC will order Agrium to:
- sell CF’s anhydrous ammonia terminal at Ritzville,Wash., about 100 km southwest of Spokane;
- sell the former Royster-Clark anhydrous ammonia terminal, which Agrium bought in 2006 at Marseilles, Ill., southwest of Chicago; and
- give up its rights to market anhydrous ammonia made at Rentech’s manufacturing plant at East Dubuque, Ill. (across the Mississippi River from Dubuque, Iowa).
Agrium had sold the East Dubuque plant, also gained through its 2006 takeover of Royster-Clark, to Rentech in March 2006 for $50 million. The FTC also requires that the distribution and marketing rights in question be handed over to Rentech.
Agrium’s acquisition of CF would otherwise have eliminated competition between the two companies in the distribution and sale of anhydrous ammonia in all three markets, the FTC said.
Each of those markets is “highly concentrated, and the proposed transaction would further increase concentration levels by reducing the number of significant competitors in the Pacific Northwest from two to one, and in the two areas in Illinois from three to two,” the FTC said.
“The complaint further alleges that the proposed transaction likely would increase the prices for anhydrous ammonium fertilizer.”
“Remaining impediment”
The agreement between the FTC and Agrium is also noteworthy for the proposed buyer of the Ritzville and Marseilles terminals: Iowa fertilizer firm Terra Industries, which itself has been fending off hostile takeover bids from CF since January.
Agrium and Terra had previously agreed that a successful Agrium takeover of CF would also see Terra buy a 50 per cent share in Agrium’s nitrogen fertilizer manufacturing plant at Carseland, Alta., to satisfy federal competition watchdogs in Canada.
The FTC would have to approve any other buyer if Terra is “later found to be an unacceptable buyer,” the commission said.
The FTC also requires Agrium to maintain the assets to be divested and operate the Ritzville terminal independently until each of the sales is completed.
As well, the FTC will require notice from Agrium if the Canadian firm plans to buy any U.S. anhydrous distribution facilities anytime in the next 10 years.
“With the receipt of all necessary regulatory approvals to acquire CF, the only remaining impediment to conclude this mutually beneficial transaction is the continued refusal of the CF board to meet with us,” Agrium CEO Mike Wilson said in a separate release Wednesday.
“Agrium remains committed to acquiring CF and will continue its efforts to achieve the combination between Agrium and CF, which would benefit the stockholders of both companies.”
Agrium recently said it plans to nominate a slate of pro-takeover directors to stand for election at CF’s 2010 annual meeting. No date has yet been set for that meeting, a CF employee said Wednesday. CF’s 2009 meeting was held at Deerfield, Ill. in April.
Agrium on Monday also announced it would extend its offer for CF shares until Jan. 22, 2010.
In a one-line statement Monday, CF Industries called Agrium’s latest offer “further away from being compelling than it ever has been.”
CF’s Canadian assets include a nitrogen fertilizer plant at Medicine Hat, Alta. Terra, meanwhile, owns a nitrogen plant at Courtright, Ont.
