Agrium to press forward with hostile CF bid

Agrium, a Canadian fertiliser maker, said on Tuesday that 62 per cent of the stock of US rival CF Industries had been tendered in support of its $3.85bn hostile takeover bid for the company.

Based on its ability to win support over a majority of CF’s shares through the tender offer, which had been set to expire on Monday night, Agrium said it would extend its deadline by another month in an effort to generate further backing.

But while Agrium said it was ready to meet immediately with CF to execute a binding merger agreement, it was not clear the results of the tender offer would compel such talks.

CF has consistently refused Agrium’s entreaties and opted to focus instead on its own hostile takeover bid for Terra Industries, a smaller US fertiliser supplier. It claims Agrium’s offer is an effort to distract its shareholders and scuttle the attempted transaction with Terra.

“Contrary to Agrium’s assertions, the tender offer results do not change the facts that Agrium’s offer substantially undervalues CF Industries, our shareholders do not support the price in the offer, and the offer has significant regulatory issues,” said Stephen Wilson, CF’s chief executive.

Agrium has little leverage to force a deal because CF has installed a “poison pill” anti-takeover provision that could make a hostile bid all but impossible to execute through a tender offer. Agrium also missed a deadline earlier this year to nominate directors to CF’s board, so it would have to wait until the company’s next annual meeting to launch a proxy context.

CF, furthermore, restructured its initial offer for Terra to eliminate a vote by its shareholders on that deal, making it more difficult for CF shareholders to voice their opinions on which deal the company should pursue.

Agrium had said it would continue to pressure CF into talks over a deal if a “compelling majority” of CF’s shares were tendered.

The offer currently consists of $40 in cash and one common share of Agrium for each share of CF, valuing CF shares at $79.58 as of midday on Tuesday. The shares were trading below that level at $71.58.