CF Industries reject Agrium bid, to continue to pursue Terra

CF Industries Holdings Inc. rejected Agrium Inc.'s $3.04 billion hostile bid as ''grossly inadequate'' and said it will proceed with its own offer to buy rival fertilizer maker Terra Industries Inc.

Agrium's takeover bid is ''a transparent attempt to interfere with CF Industries' proposed business combination with Terra,'' CF CEO Stephen R Wilson said today in a statement. CF is prepared to increase the value of its bid for Terra so that it would be equivalent to $27.50 a share, or $2.74 billion, Wilson said in an accompanying letter to Terra's board of directors. The price represents a premium of $1.39, or 5 per cent, over Terra Industries' closing price of $26.11 on Friday. (See: Hostile bid for Terra lands CF Industries in Agrium's crosshairs / CF Industries launches $2.37-billion hostile bid for rival fertiliser maker Terra)

Sioux City, Iowa-based Terra officially rejected an earlier offer from CF Industries on 5 March. CF Industries initially bid 0.4235 of a share of its stock for each share of Terra Industries on 15 January.

That offer was worth about $18.73 a share based on CF Industries' closing price of $44.25 a share on 14 January. Since then, CF Industries shares have risen to $60.59 a share.

Agrium and CF are competing to become the dominant North American producer of ammonia and other nitrogen-based crop nutrients that farmers use to increase yields. Fertilizer-makers' share prices, which had risen more than fourfold since 2003, plunged 58 per cent last year, making takeovers a more affordable way to expand than by building new facilities.

Agrium's takeover of CF would create a company with annual sales of about $14 billion, generating $150 million of savings within three years, Agrium CEO Michael M Wilson has said. The combination would be the world's second- largest nitrogen producer by capacity after Oslo-based Yara International ASA, according to Agrium.

Shares of CF Industries fell $2, or 3.3 per cent, to $58.60 in pre-market trading. Shares of Terra closed at $26.11 on Friday.