Agrium Offers $3.6 Billion for CF Industries

123jump.com Staff
25 Feb, 2009
New York City

Agrium Inc makes an unsolicited offer to acquire CF Industries that values the fertilizer distributor at $3.6 billion, while CF is pursuing Terra Industries. The proposed merger between the two fertilizer makers and retailers is expected to save $150 million a year after three years.

[R]10:35AM New York – Agrium Inc makes an unsolicited offer to acquire CF Industries that values the fertilizer distributor at $3.6 billion.[/R]

Agrium Inc, Alberta, Canada based fertilizer maker and retailer proposed to acquire CF Industries Holdings, Inc for cash and share that valued the acquisition at $72.00 per CF share. The $3.6 billion unsolicited acquisition will be funded by internal resources of Agrium and loan commitments from banks.

The offer represents 30% premium to closing price of CF yesterday and 42% over the 30-day average share price adjusted for volume. Under the proposed terms CF shareholders will receive one share of Agrium and $31.70 cash and control of 24% of the combined company.

The merger of two companies hopes to achieve a synergy between the North American distribution network for crop nutrient of the CF with the global network of Agrium. The combined the company will have $14 billion in sales and save annually $150 million after the three years of the merger.

In a letter addressed to CF board, Agrium said that it has sufficient internal resources to fund the acquisition and committed financing underwritten by Royal Bank of Canada and The Bank of Nova Scotia.

Agrium employs more than 10,000 people and is a leading producer of potassium, nitrogen and phosphate based fertilizers and also wholesaler of specialty fertilizer and generated $10 billion in sales.

The Agrium bid comes after the recent action by CF to acquire Terra Industries Inc a month ago. CF hoped that Terra acquisition will save the combined company more than $100 million annually. The company in a letter addressed to the board of Terra commenced the exchange offer for 0.4235 share of CF for each share of Terra, scheduled to expire on May 15.

CF Industries produces and distributes nitrogen and phosphate fertilizer products and mines and manufactures phosphate in Central Florida and distributes fertilizer in the Midwest.

CF Industries ((CF)) jumped 14% to $63.35 in the early trading n 6.5 million share volume. The stock in the last one year has traded between a high of $172.99 and a low of $37.71.