Thursday, November 5th, 2009
Agrium makes 'best and final' offer for reluctant CF Industries: US$4.5 billion
CALGARY - Fertilizer giant Agrium Inc. (TSX:AGU) is hopeful a sweetened "best and final" offer for CF Industries Holdings Inc. (NYSE:CF) Thursday will convince its reluctant takeover target to at least take a seat at the bargaining table.
"We've reached out a number of times and we've always been rejected," said Agrium chief financial officer Bruce Waterman in an interview.
"I feel a little bit like a guy at the dance who's asked all the girls to dance and he's wondering whether he should go around and ask them again."
Agrium has been doggedly pursuing Deerfield, Ill.-based CF since February, and has been repeatedly rebuffed.
The latest offer expires at midnight ET Nov. 18.
"This is Agrium's best and final offer," president and CEO Mike Wilson declared Thursday in a statement.
Agrium has used similar language previously in the drawn out battle, but has always signalled its openness to raise its offer if CF could clearly demonstrate it was worth more.
Since CF's management has repeatedly refused to even take a meeting with Agrium, the would-be acquirer took it upon itself to crunch the numbers and come up with an offer that better reflects CF's value, Waterman said.
"The world has changed since we first made our bid, and there's been some pluses and some minuses, which we've incorporated," he said.
"There's a number of areas where we didn't have visibility in terms of what was there, but as time has gone on we spent a lot of time trying to quantify that. Right now we think we've included all the value that's there."
UBS Investment Research analyst Brian MacArthur said the sweetened offer probably won't get Agrium very far.
"We believe CF management is unlikely to consider this an adequate offer and unless pressured by shareholders CF is unlikely to even meet with Agrium," he wrote in a note to clients.
Agrium's latest offer for CF amounts to US$92.99 per CF share, based on Agrium's Wednesday closing stock price. That values the deal at roughly US$4.5 billion.
CF stockholders would receive $45 in cash per share, up from an earlier offer of $40, plus one share of Agrium for each CF share.
That is a premium of over 67 per cent above CF's closing stock price the day before Agrium first came forward as a suitor.
On the New York Stock Exchange Thursday, CF shares were trading at $79.80 - a nearly eight per cent drop from Wednesday's close - giving that company a stock market value of $3.87 billion.
Agrium's shares were 4.4 per cent to US$50.08 on the New York Stock Exchange and up just under four per cent to C$53.27 on the Toronto Stock Exchange.
CF has been fighting its own hostile takeover battle for Terra Industries Inc. (NYSE:TRA), another U.S.-based agricultural products company that has itself turned down several offers from CF.
Just on Wednesday Terra said a US$4.1-billion from CF was still too low.
In a statement following the revised Agrium bid, CF said Thursday its management will review it, but noted it "represents substantially lower multiples of (earnings before interest, taxes, depreciation and amortization)" than its offer for Terra.
"CF Industries' board of directors will in due course review the latest revised proposal," the company said.
