Terra rejects CF Industries' latest takeover offer

Terra Industries Inc. rejected a $3.85 billion takeover offer from rival fertilizer maker CF Industries Holdings Inc., saying the latest proposal "substantially undervalues" the company.

The most recent bid doesn't reflect "brighter prospects" for the crop-nutrients industry, Sioux City, Iowa-based Terra said today in a statement. CF's offer is $29.25 per share in cash plus 0.1034 of a CF share.

CF, which launched its offer for Terra on Jan. 15, has been fending off a hostile bid from Calgary-based Agrium Inc. since Feb. 25. At stake in the three-way battle is whether Agrium or CF will become the world's second-largest publicly traded maker of nitrogen-based fertilizers after Yara International ASA of Norway. Terra has rejected all of CF's previous offers as inadequate.

"This thing has been going on for almost a year," Louis Meyer, a New York-based analyst at Oscar Gruss & Son Inc., said today in a telephone interview. "Terra clearly wants to stay independent."

Terry Huch, a CF spokesman, declined in a telephone interview to comment on Terra's rejection of the offer.

The cash portion of CF's most recent bid previously included $7.50 a share for a dividend Terra declared in September. The dividend was paid Dec. 11 and is no longer counted in the offer.

Terra fell 19 cents to $35.11 at 10:16 a.m. in New York Stock Exchange composite trading. The shares have more than doubled this year. CF declined 39 cents to $89.60. Agrium dropped 39 cents to C$66.01 in Toronto Stock Exchange trading.