US Terra to shareholders: Vote for our guys, against CF

13 October 2009 15:36  [Source: ICIS news]

HOUSTON (ICIS news)--US nitrogen fertilizer company Terra Industries asked its shareholders on Tuesday to vote before the 20 November annual meeting for its three board-nominated directors, and spurn the three people nominated by merger-hungry rival CF Industries.

“Terra’s board unanimously recommends that shareholders re-elect three independent, highly qualified and experienced directors,” Terra president and chief executive Michael Bennett said in a letter sent to Terra shareholders on 13 October.

Voting for the Terra board began on Tuesday by phone, internet and proxy card and will continue until the 20 November annual meeting.

Among Iowa-based Terra’s board members up for re-election is chairman Henry Slack.

Illinois-based CF made its first offer to acquire Terra on 15 January.

CF’s current offer is 0.465 of one CF's share for every Terra share, which CF planned to adjust to include a $7.50 (€5.10) dividend Terra wants to issue to its stockholders.

The transaction values Terra at almost $4bn.

CF had a current market value of about $4.3bn.

Terra said the CF offer was opportunistic and contrary to Terra’s strategy.

“A combination with CF would shift our focus back to lower margin agricultural urea and ammonia, which represent 70% of CF’s nitrogen sales and only 16% of Terra’s, while significantly reducing Terra’s geographical advantages,” the shareholder letter said.

Terra operates nine ammonia-based nitrogen chemical plants on three continents, while CF operates in North America two nitrogen complexes and one phosphate plant, Terra said.

Terra added that CF had 73% of its ammonia production on the US Gulf where import competition is the most severe, whereas 65% of Terra’s ammonia production was located inland in the US, or in gas-advantaged country such as Trinidad where Terra has a 50% interest in an ammonia plant.

Meanwhile, Canadian fertilizer company Agrium had made a hostile takeover bid for CF, offering $40 in cash plus one Agrium share per CF
share, which CF has repeatedly rejected.

Terra said it believed that CF shareholders would be unlikely to approve a transaction with Terra if given the alternative of the Agrium bid.

Terra said it also believed CF’s stock price was inflated as a result of Agrium’s offer, meaning the actual value of CF’s offer could be significantly lower than current trading prices would indicate.

($1 = €0.68)

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By: Frank Zaworski
+1 713 525 2653

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