Agrium says CF should reconsider bid after Terra deal

Agrium Inc. said CF Industries Holdings Inc. should reconsider Agrium's takeover offer after one of CF's competitors agreed to be purchased by Yara International ASA.

Agrium remains focused on acquiring CF and isn't interested in topping Yara's bid for Terra Industries Inc., Richard Downey, a spokesman for Calgary-based Agrium, said today in a telephone interview. Terra, based in Sioux City, Iowa, yesterday agreed to be purchased by Oslo-based Yara, the world's largest fertilizer maker, for $4.1 billion.

"Terra was a smaller regional player, like CF," Downey said today in the interview. "They realize that there are benefits to being part of a larger global company. Sooner or later, CF will recognize that as well. That is good news for us."

Terra's purchase makes Deerfield-based CF more likely to consider Agrium's offer, which is valued at about $110 a share, or $5.5 billion, Chris Damas, a BCMI research analyst in Barrie, Ontario, said today in a note to clients. For the past year, CF has spurned Agrium offers containing progressively larger cash components.

"I would think having a giant buying their closest competitor in the USA should give CF pause for thought," Damas said in the report.

Terry Huch, a CF spokesman, declined to comment.

Agrium has said it plans to nominate two directors to CF's board at the next annual shareholders meeting and seek stockholder approval to eliminate a so-called poison pill. The provision prevents a hostile acquirer from accumulating more than 15 percent of the company without the board's approval.

Agrium may be undervaluing CF assets, based on the price Yara is paying for Terra, Damas said.

CF rose $3.07, or 3.1 percent, to $103.57 at 4:15 p.m. in New York Stock Exchange composite trading. Terra jumped $7.44, or 22 percent, to $40.69. Agrium gained C$1.19, or 1.8 percent, to C$68.79 on the Toronto Stock Exchange.

CF had offered to buy Terra for about $3.9 billion before withdrawing the bid last month. The company has had no contact with Terra since Jan. 14 and had no comment on the Terra-Yara merger because it is still "digesting" details of the transaction, Chief Executive Officer Stephen Wilson said today on a call with analysts and investors.