Ownership of several Canadian nitrogen facilities is again up in the air as U.S. fertilizer firm Terra Industries has accepted a new proposal from the suitor it rejected for over a year.
Terra’s Chicago-based rival CF Industries, which has made several rejected hostile bids for Terra since January last year, appears to have wooed its target with its March 2 cash-and-stock bid, worth an estimated US$4.7 billion.
Sioux City-based Terra on Wednesday declared CF’s bid “constitutes a superior proposal” to the US$4.1 billion offer from its previous suitor of choice, Yara International.
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The declaration gives Yara five business days to revise its bid and either meet or beat CF’s offer, worth US$37.15 plus 0.0953 CF shares per Terra share.
“We believe that Terra is worth more to CF Industries than to any other acquirer, given the strategic benefits of the transaction, including synergies, which only CF Industries can achieve,” CF CEO Stephen Wilson said in a separate release Wednesday.
“Any offer from Yara must be heavily discounted for the substantial risks and length of time associated with closing,” he added.
Going back to CF comes at a cost for Terra, as the terms of its agreement with Yara would entitle the Norwegian chemical firm to a breakup fee of US$123 million.
Barring any new bid from Yara, a CF/Terra merger would give CF control of Terra’s major Canadian asset, a nitrogen fertilizer plant at Courtright, Ont., near Sarnia.
CF and Yara also own major Canadian nitrogen plants, at Medicine Hat, Alta. and Belle Plaine, Sask., respectively.
But a CF/Terra merger could also effectively end the hostile bid for CF, mounted in February last year by Calgary-based fertilizer and ag retail giant Agrium.
Agrium, whose latest hostile cash-and-stock bid for CF is due to expire March 22, had pledged to sell a 50 per cent stake in its N plant at Carseland, Alta. to Terra, but only if an Agrium/CF merger succeeded.
An Agrium spokesman wasn’t immediately available for comment Wednesday, but a Canadian Press report from Calgary notes that Agrium has previously said it would walk away from its play for CF if CF won control of Terra.
