Board vote may be key to CF takeover

Agrium Inc., pursuing a hostile bid to acquire CF Industries Holdings Inc., will claim "a victory" if it convinces at least 20 percent of CF investors to vote against CF-backed board nominees at a meeting tomorrow.

"Twenty percent or above would be a significant message to CF management and the board that they should come and talk to us," Agrium Chief Financial Officer Bruce Waterman said today at a pension-industry conference in Toronto. "That would be a victory."

Agrium, North America's third-largest fertilizer maker, has urged CF shareholders to withhold their votes at CF's annual meeting as a means of applying pressure on management to join merger talks. Calgary-based Agrium began a bid to acquire Deerfield-based CF in February and started a "withhold" campaign after missing a deadline to nominate an alternative slate of CF directors.

"If people withhold, they're really withholding because they want CF to come and negotiate with us," Waterman said.

CF Chief Executive Officer Stephen Wilson has rejected Agrium's proposed takeover as "grossly inadequate" and repeatedly said CF's own bid for Sioux City, Iowa-based Terra Industries Inc. makes more sense for CF shareholders.

A combination of any two of the companies would create the world's second-largest publicly traded producer of nitrogen fertilizer after Yara International ASA of Norway, executives have said.

'Superior Value'

"What we want, as a board and a management team, is to pursue our strategy of combining CF Industries with Terra Industries, which we believe is a superior value proposition to the Agrium proposal," CF's Wilson said last week.

Agrium fell 88 cents, or 1.8 percent, to C$48.08 at 2 p.m. in Toronto Stock Exchange trading. The shares rose 18 percent this year before today.

CF Industries dropped $2.53, or 3.6 percent, to $67.42 in New York Stock Exchange composite trading. Terra Industries declined 82 cents, or 2.9 percent, to $27.37.