I hope you'll forgive me for not commenting on every twist
and turn in the seemingly endless three-way takeover
tug-of-war between fertilizer players
Agrium (NYSE: AGU),
CF Industries (NYSE: CF), and
Terra Industries (NYSE: TRA). About a month
ago, Terra rejected CF's advances for the fifth time. Now
that there's a
sixthproposal on the table (what's the record here,
anyway?), I suppose it's a fine time to get up to speed on
these potential pairings.
By Halloween, CF had dug fairly deep into its bag of
takeover tricks in its pursuit of Terra, which stretches
all the way back to January. In addition to begrudgingly
raising the exchange ratio of its offer, CF both launched a
proxy contest (Terra's annual meeting convenes two weeks from
Friday) and acquired 7% of its target's shares in the open
market.
What CF had not done until yesterday was offer cash as a
component of its bid. As they say, money talks and, uh, other
stuff walks.
OK, so I'm paraphrasing. But now that CF is dangling a
majority-cash bid (to be financed with help from its
financial advisor
Morgan Stanley (NYSE: MS)) in front of Terra
shareholders, this thing finally has a chance of succeeding.
Note that a shareholder vote is no longer required, which
will certainly make this deal easier to close. Terra, still
playing this one close to the vest, said last night that its
Board "will review and consider the revised proposal in due
course."
What made this revised bid possible was the same factor
that's allowed
EnCana (NYSE: ECA) to
spin offits integrated oil subsidiary Cenovus Energy and
Denbury Resources (NYSE: DNR) to merge with
Encore Acquisition (NYSE: EAC). It's all
about the credit market thaw.
As for Agrium's advances on CF, it was silly of me to take
the former at its word when it said it would
walk awayif its tender offer failed back in June. Agrium
has just continued to push back the expiration of its offer
of $40 plus one Agrium share per CF share. As of Friday, that
represented a miniscule premium of 4%. Unless it takes a cue
from CF and goes big with a bigger cash bid, Agrium will
likely walk out of this takeover tango without a dance
partner.
This article was originally published as
Finally, a Realistic Fertilizer Bidon
Fool.com
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