Agrium Continues Attempt To Acquire Rival CF Industries

Posted by Matt Hopkins|7 August 2009

Even with a 42% drop in quarterly profit, Calgary, Canada-based Agrium Inc. is resolved to acquire US rival CF Industries Holdings Inc. in a US $4.1-billion takeover bid, according to the Calgary Herald. Agrium, North America’s third-largest fertilizer maker, reiterated its commitment to acquire CF Industries even as it reported its second-quarter financial results. Falling potash and phosphate application rates and reduced retail crop nutrient margins reduced net earnings, but Agrium still posted its second-highest quarterly profit in company history, beating market expectations. Agrium said it expects a return to more normal crop input demand patterns this fall.

At the same time, Illinois, US-based CF Industries, whose board of directors has thus far rejected all of Agrium’s offers, said it’s prepared to increase its bid for its own takeover target, Terra Industries Inc. CF is currently offering $3.7 billion for the Iowa, US nitrogen producer. Terra’s board of directors said it will consider CF’s latest proposal at a meeting to be held before the end of August.

In March, Agrium made an offer for all of the outstanding shares of CF, to which 62% of CF stockholders responded positively. With CF’s board still unwilling to engage, however, Agrium extended the offer to Aug. 19.

Mike Wilson, Agrium president and chief executive, said it’s clear CF shareholders view Agrium’s offer to be compelling, “as evidenced by the tender results and based on ongoing discussions that we maintain with their shareholders.” As to the “minor modifications” CF has made in its latest offer to Terra, Wilson said it “strengthens our conviction that our offer for CF is superior to any alternative CF has, including paying a premium for Terra.”

Agrium reported second-quarter net earnings of $370 million, compared with $636 million the year earlier quarter. Netsales were $4.09 billion, up from $3.87
billion last year. Retail net sales led with $3.14 billion, up from $2.50 billion. Wholesale net sales fell to $950 million, from $1.39 billion, due to lower sales prices and volumes for nitrogen and phosphate products along with lower potash sales volumes.