CF seals $4.7 billion deal for Terra

After more than a year of bids and counterbids, CF Industries landed Terra Industries on Friday for $4.7 billion in a deal that will create one of the world’s largest fertilizer companies.

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The announcement came just hours after Norway’s Yara International, which had been vying for Terra as well, said it would not top the latest bid by CF Industries.

The deal was approved by the boards of both companies after one of the longest running takeover fights in recent years.

“A combined CF Industries and Terra creates a strong leader in the global fertilizer industry with superior assets that will generate long-term value for stockholders, provide more benefits to customers and offer increased opportunities to employees,” said Stephen Wilson, the chief executive at CF. “We are excited to begin working together to become a more competitive global fertilizer player with enhanced scale, a broader strategic platform and enhanced access to capital markets.”

Soaring commodity prices have created a lot of energy in the agriculture sector. Terra and CF have a combined annual revenue of $4.2 billion.

CF and Terra say the tie up will save them around $135 million each year because they will be able to cut overlapping transportation and corporate costs.

Terra Industries Inc., based in Sioux City, Iowa, said it has ended negotiations with Yara, the world’s largest fertilizer company, which had offered $4.1 billion.

Earlier this week, Terra notified both companies that it favored the bid from CF, which amounts to $37.15 in cash per share and nearly one-tenth of a share of common stock for each Terra share.

Terra gave Yara five days to decide if it would bid again, but the company gave its response in two.

In addition to landing Terra, CF Industries also shook free of Canadian fertilizer company Agrium Inc. Agrium had been pursuing CF in prevent its buyout of Terra, but dropped its $5.5-billion takeover bid for CF on Thursday.

Terra had repeatedly rejected CF’s previous offers. CF had vowed to end its hostile bids, but went back on the offensive after Terra agreed to Yara’s deal. CF is based in Deerfield, Ill.

Terra clients are largely industrial, while CF Industries focuses on agricultural customers.

Shares of CF Industries Holdings Inc. fell $4.29, or 4.3 percent, to $96.32. Terra’s stock fell 69 cents, or 1.5 percent, to $46.21.

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