CF Industries (CF) Sends Letter to Terra (TRA) Stockholders

November 9, 2009 2:34 PM EST

CF Industries Holdings, Inc. (NYSE: CF) today sent the following letter to the stockholders of Terra Industries Inc. (NYSE: TRA).

Dear Terra Industries Stockholder:

In just a few days at Terra's November 20th annual meeting, you have the opportunity to determine whether Terra should pursue a premium offer worth over $40 per Terra share or whether the incumbent Terra board should continue its refusal to realize superior value for your investment. Last week, we increased our offer to acquire Terra Industries and changed the structure to provide you certainty of value. Our enhanced offer to acquire Terra would give you $32.00 per share in cash and 0.1034 of a share of CF Industries common stock for each share of Terra common stock you own (including the $7.50 per share special cash dividend declared by Terra).

Send a message to the Terra board by electing the three highly qualified, independent nominees listed on the BLUE proxy card. CF Industries is not seeking control of the Terra board at the upcoming annual meeting - we are seeking to elect three nominees who are committed only to act in your best interests. We urge you to vote FOR our nominees on the enclosed BLUE proxy card TODAY.

CF INDUSTRIES IS OFFERING YOU A SIGNIFICANT PREMIUM FOR YOUR SHARES

The value of our offer is now more than $40 per share of Terra common stock. The premium we are offering you is approximately 40% above what we believe would be the price at which Terra common stock would have traded without takeover speculation. Our offer represents very attractive multiples of 7.1 times trailing 12-months EBITDA and 6.7 times analysts' consensus estimate of next year's EBITDA. If our nominees fail to get elected at the upcoming election, we have no doubt that there will be a significant decline in the value of your Terra shares.

Our offer, which now comprises mostly cash, provides you with certainty of value. Our offer also provides certainty of closing. Our offer is not subject to a financing condition and we have satisfied all antitrust regulatory conditions needed to close the transaction.

STRATEGIC BENEFIT OF COMBINING CF INDUSTRIES AND TERRA IS UNDENIABLE

The combination of CF Industries and Terra, first suggested by Terra, is compelling, given the complementary strengths of the two companies. For example, both CF Industries and Terra have invested heavily in upgraded nitrogen product capacity, especially UAN, and have developed strong customer relationships with differentiated channels of distribution. Terra's focus on industrial customers and CF Industries' focus on agricultural customers complement each other and ensure greater strength and resilience through industry cycles. Our respective strategies would be enhanced by leveraging common assets, including diverse production locations, in-market storage and water transportation capability to reach customers more efficiently and effectively.

A COMBINED COMPANY WOULD PROVIDE A STRONG FINANCIAL PLATFORM TO PURSUE GROWTH

CF Industries and Terra as a combined company would have approximately $6 billion in total enterprise value. The combined company will be a larger, more competitive entity with improved access to the capital markets and a stronger strategic platform from which to pursue growth and create increased value for stockholders. CF Industries' board and management team will maintain a strong balance sheet and continue the company's disciplined approach to the management of its capital structure after the closing of the transaction.

The combined company would have the scope and scale to pursue organic growth opportunities neither could pursue alone. Terra's strategic objectives will only be enhanced under a combination with CF Industries. For example, should the industrial and environmental markets for nitrogen products prove to be attractive, we believe the combined company will be able to pursue these initiatives with greater capability, more flexibility and lower investment. CF Industries has a long history of executing successful projects and continues to develop major organic growth opportunities, such as its nitrogen complex in Peru, which would allow the company to penetrate an underserved, growing market....

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