CF’s knock-out punch?

December 7, 2009

The ungainly three-way bidding battle that has roiled the fertile fertilizer market for nearly a year could finally be drawing to a close. CF Industries has raised its bid for Terra Industries by $4.75 in cash per share, bringing the value of the hostile takeover bid to $4.58 billion and offering about a 10 percent boost to Terra’s payoff from CF’s previous offer. The ball is now bouncing through the court of Canada’s Agrium, which is bidding for CF, on its way back to Terra’s board, which will consider the improved bid later this week at a board meeting.

The offer is nearly 18 percent above Terra’s closing price on Friday, so it would appear all of CF’s cards are on the table. Terra shareholders voted last week to add three new members proposed by CF to the Terra board, increasing the chances that CF’s attempts to takeover its rival would be successful.

CF said in a letter to the Terra board of directors dated Dec. 4, that it was “prepared to meet immediately and to sign a merger agreement before the market opens on Monday, December 7th.”

If Terra says yes, CF will probably be too big for Canada’s Agrium to swallow. That’s been the plan for CF, as it has fended off hostile approaches from Agrium for months. And the clock could be ticking, with funding CF’s funding commitments set to expire later this month.

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