CF Industries goes hostile with bid for Terra

CF Industries Holdings Inc., a U.S. maker of nitrogen fertilizer, took a $2.41 billion all-stock takeover offer directly to the shareholders of rival crop- nutrient producer Terra Industries Inc.

Terra shareholders would get 0.4235 of a CF Industries' share for each share they own, unchanged from a proposal first unveiled Jan. 15, Deerfield, Illinois-based CF Industries said today in a statement. The offer, which expires May 15, values Terra at $23.60 a share based on CF Industries' Feb. 20 closing price of $55.72 in New York.

"We view the transaction as a merger in which your stockholders are receiving stock and sharing in the future upside of the combined company, including over $100 million of annual operating synergies," CF Industries Chief Executive Officer Stephen R. Wilson said today in a letter to Terra's board.

CF Industries is moving to convince shareholders of Sioux City, Iowa-based Terra to accept its offer while also continuing efforts for a "negotiated merger." Prices for nitrogen and phosphate fertilizer dropped in the second half after farmers deferred purchases as crop prices fell from records.

CF Industries said it would welcome Michael Bennett, Terra's chief executive officer, as a director and senior executive of the combined company if the transaction is completed. In the meantime, CF Industries said it is proceeding with plans to replace three members of Terra's board at Terra's annual meeting, scheduled for May 15.

In a separate statement today, Terra urged its shareholders to take no immediate action. Terra said last month CF Industries' offer undervalues the company.

Terra declined $1.33, or 5.4 percent, to $23.35 at 2:15 p.m. in New York Stock Exchange composite trading. The shares have gained 48 percent this year through Feb. 20.

CF Industries fell $4.20, or 7.5 percent, to $51.52 in New York. The shares rose 13 percent this year through Feb. 20.