US CF bid for Terra expanded, extended

05 August 2009 16:12  [Source: ICIS news]

HOUSTON (ICIS news) --US fertilizer maker CF Industries (CF) said on Wednesday it was prepared to increase an offer for a merger with Iowa-based Terra Industries and would extend the deadline for its offer to 21 August.

Illinois-based CF said it would increase its offer to a fixed exchange ratio of 0.465 shares of CF Industries for each Terra common share, up from the most recent offer of 0.4539 shares.

Analysts said the offer had a value of $3.71bn (€2.56bn).

The proposal represented a premium of 35% over the exchange ratio on 15 January, just prior to when the initial offer was made, and a 38% premium to the average exchange ratio over the one-year period prior to that offer, CF said.

CF also is prepared to return at least $1bn of cash to stockholders of the combined company following the closing of the transaction, which likely would be accomplished through open market purchases or a self-tender offer.

In addition, immediately prior to the consummation of the combination, CF would distribute an aggregate of 5m contingent future shares to CF stockholders.

These contingent shares would be converted into CF common stock should the stock trade at more than $115/share over a specified period following the close.

“We continue to believe firmly that a business combination with Terra is the best way to create stockholder value and is in the best interests of both CF Industries and Terra stockholders,” said CF chairman, president and CEO Stephen Wilson.

“Once the pre-merger waiting period for the Terra transaction expires this evening (5 August) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, we will be in a position to close promptly following signing of a merger agreement,” Wilson said.

CF expected the merger to generate $105m-135m in annual cost synergies by combining corporate functions, optimising transportation and distribution systems, and through greater economies of scale in procurement and purchasing.

As of the close of business on Tuesday, 9,144,017 shares of Terra common stock had been tendered into the exchange offer, CF said.

($1 = €0.69)

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By: Frank Zaworski
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