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Agrium extends CF takeover offer, again

Agrium’s hostile play for U.S. fertilizer firm CF Industries has gone further into overtime.

Having announced earlier this month that its increased May 11 offer would be its last, the Calgary-based fertilizer and ag retail giant said Tuesday it now has 62 per cent (30.14 million) of CF’s common shares tendered to its cash-and-stock bid.

Clearly encouraged by the uptake on its offer, Agrium said Tuesday it would extend the offer’s expiration date to midnight ET on July 22.

CF’s board of directors has rejected Agrium’s overtures since late February, saying they undervalue the company and describing them as interference in CF’s own hostile bid for Iowa-based rival Terra Industries. Agrium’s latest bid per CF share is one Agrium common share plus US$40.

“CF stockholders have sent a resounding message to CF’s board that they support Agrium’s offer,” Agrium CEO Mike Wilson said in a release Tuesday.

The Chicago-based company’s stockholders “clearly understand that the Agrium offer is far superior to any alternative articulated by CF, including remaining independent or paying a premium for Terra,” Wilson said.

“These are extraordinarily strong results, particularly given that CF’s poison pill and other defense mechanisms are still in place and we urge CF’s board to respect this clear message from its stockholders.”

A “poison pill” or “shareholder rights plan” is a mechanism set up by publicly traded companies seeking to fend off unsolicited takeover bids.

When triggered by a hostile bidder’s purchase of shares beyond a specific level, the targeted company swallows the pill by issuing rights to all its other shareholders to buy a massive amount of new stock, diluting the hostile bidder’s ownership stake and making a full takeover bid much more expensive.

Calling on CF’s board to spit out the poison pill, Agrium’s Wilson reiterated that “a combined Agrium/CF would be a terrific company and Agrium is ready to meet immediately with CF and prepared to expeditiously execute a fully financed, binding merger agreement.”

Canadian assets at stake in the deal include CF’s major nitrogen fertilizer facility at Medicine Hat, Alta.

“No action”

CF’s marriage proposal for Terra, rejected since January by the Iowa company’s board of directors, on Monday got approval from Canada’s federal Competition Bureau, which sent CF a “no action” letter indicating it wouldn’t mount any antitrust challenge of a CF/Terra merger.

Terra’s Canadian assets include a major nitrogen fertilizer plant at Courtright, Ont., south of Sarnia.

The U.S. Federal Trade Commission, however, hasn’t yet given its blessing to CF’s bid for Terra. According to CF, the FTC earlier this month requested additional information on the proposed merger.

That request, CF said, is “narrowly focused” on direct sale of ammonia for nonagricultural purposes. That part of CF’s business represented less than one per cent of its 2008 total revenues, the company said Monday.

CF on June 19 extended the deadline on its bid for Terra to 5 p.m. ET on July 10.

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