Terra Industries rejects CF's latest takeover offer

Terra Industries Inc. rejected the latest takeover bid from rival fertilizer producer CF Industries Holdings Inc. as the two companies move toward a proxy fight at Terra's annual meeting in November.

"A combination of our companies lacks compelling industrial logic and runs counter to Terra's strategic objectives," Terra Chief Executive Officer Michael Bennett said today in a statement. Sioux City, Iowa-based Terra said CF's offer threatens to destroy Terra's "considerable strengths as a 'pure play' nitrogen company."

Deerfield-based CF said Sept. 28 that it bought about 7 percent of Terra's shares on the open market in the previous two weeks. Terra, in a move analysts described as defensive, unveiled plans last week to return about $750 million in cash to shareholders through a special dividend, repurchase $330 million of notes and sell $600 million of new debt to "recalibrate" its balance sheet.

CF renewed its commitment to acquire Terra this week in a draft merger agreement offering 0.465 CF share for each Terra share. CF said in a regulatory filing it would seek proxies from shareholders supporting its nominees to Terra's board at that company's Nov. 20 annual meeting.

Terra gained 18 cents to $34.85 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have more than doubled this year.

CF, which is the focus of a takeover attempt by Calgary-based Agrium Inc., fell $2.03, or 2.4 percent, to $84.20 in New York.