“Fertilizer Wars” Throw Spotlight On Three CEOs

Mike Wilson, Steve Wilson and Mike Bennett are patient men. Embroiled in a nine-month three-way takeover battle, the chief executives of fertilizer companies Agrium Inc., CF Industries Holdings Inc., and Terra Industries Inc. have stayed in the headlines even as a recession and falling grain prices pushed the stocks of their companies off their 2008 peaks.

Besides their shared names – two Wilsons and two Mikes – the men share a strong belief that the world’s growing demand for food and biofuel will lead to sustained growth for the fertilizer sector and that their companies are poised to be big winners.

This belief prodded CF to launch a hostile bid for Terra in January. Agrium followed with a hostile offer for CF the following month, as the three jockey for positions in what they hope will be one of the hottest sectors in coming years.

Agrium’s recently sweetened bid for CF is worth about $4.5 billion in cash and shares. CF is offering about $4.1 billion in cash and shares for Terra.

“You can’t let your emotions get in the way of either running away from a deal, or running rapidly to the point of overpaying in a deal,” Agrium’s Wilson said in an interview after his company raised its bid for CF by $5 a share in the latest salvo in what some already call the “fertilizer wars.”

That seemed to discourage some CF investors who had been hoping for a larger bump, and CF shares fell sharply.

“I don’t think Agrium’s latest offer is enough and I don’t think CF is going to jump at this offer,” said Morningstar analyst Ben Johnson. “The deadlock is going to continue, pending the outcome of the Terra shareholder meeting.”

In six years Wilson, who formerly headed Dow Chemical’s Japanese division, has guided Agrium from being primarily a fertilizer maker to also becoming North America’s largest agricultural products retailer.

He has presided over around a dozen deals and is no stranger to hostile takeover bids, winning out in a $600-million plus unfriendly offer for Royster-Clark in 2005-06.

“Mike has successfully identified the gaps and space in the industry for Agrium and executed acquisitions in that space,” said Terry Ortslan of TSO and Associates in Montreal. “They have been very disciplined in their approach of what and who they buy, and how much they pay in a competitive environment.”


But Wilson may have met his match in his CF counterpart Steve Wilson, who has repeatedly spurned Agrium’s overtures.

Steve Wilson moved to CF in 1991 after 17 years in the steel industry. He has been chief executive of CF since 2003 and took the Deerfield, Illinois company public in 2005.

Despite being caught in the middle of the battle, Wilson has kept his cool and sought to address the criticism that CF’s initial all-stock bid for Terra did not allow its own shareholders a vote on the deal.

“This company has been focused on shareholders from the day we went public on Aug. 11, 2005,” Wilson told shareholders who grumbled about his strategy.

“I think the way we’ve conducted ourselves since January, in terms of working to put CF and Terra together, and dealing with the Agrium issue have been all done in the interest of building long-term stockholder value. And that’s the way we will continue to run the business.”

Mike Bennett, for his part, has been at Terra for more than 35 years, joining the Sioux City, Iowa-based company in 1973 as an operations technician and working his way up the ladder to become CEO in 2001.

He has earned a reputation as a strong operator and a consummate company man who is fiercely loyal to Sioux City.

But Bennett could face a tough battle at Terra’s shareholder meeting on Nov. 20, where CF has nominated a slate of directors for Terra’s board. A victory for the CF slate would likely help CF clinch a deal.

“This is a gritty management (at Terra) and they value their independence. And I think they’ve made an awful good case for continuing to be independent,” said Charlie Rentschler analyst at Wall Street Access.

Personalities and strategies aside, some doubt that either deal will succeed and argue that although both acquirers have sweetened their offers, the premiums in both offers are far from being deal clinchers.

“The most likely outcome? Bankers win, Agrium, CF and Terra shareowners lose, with a lot of wasted money on deals that were improbable from the outset,” said Sterne Agee analyst Mark Connelly.

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