TD Newcrest Downgrades Agrium (AGU) to Hold; TRA Gets CF Directors, AGU/CF Less Likely

November 23, 2009 7:24 AM EST

TD Newcrest downgrades Agrium Inc. (NYSE: AGU) from Buy to Hold. Price target $60.

TD analyst says, "We view the Terra (NYSE: TRA) director vote as slight positive for AGU as a standalone (i.e., reduced execution risk, balanced business model rather than disproportionate nitrogen exposure, etc.). However, we are downgrading AGU to HOLD due to stock price appreciation. Hence, net neutral."

"CF Industries' (NYSE: CF) Director Nominees Elected. Based on preliminary results, CF’s three director nominees have been elected to Terra Industries' board of directors. Final results will be announced within the next two weeks. However, TRA has reported that the preliminary voting results indicate that CF’s nominees were elected by a very narrow margin of approximately 2% (after taking into account CF’s 7% ownership stake of TRA), which essentially limits the perception of direct support for CF’s proposal...CF/TRA Combination Still Has Obstacles. Although the potential for a CF/TRA combination is still unclear, the election gives CF three seats on the TRA board, which logically could eventually lead to TRA engaging in discussions with CF. As well, TRA reported its "shareholders have noted that current trends in the fertilizer market could provide potential consolidation opportunities for many market participants. Terra’s Board, as always, will continue to maintain an open-minded approach to considering any bona fide opportunity to create meaningful value for Terra shareholders." However, Michael Bennett, CEO, Terra Industries, responded to the director results that “We have not had a unanimous opinion from shareholders on anything.” More specifically, TRA has once again concluded that the proposed merger agreement from CF does not provide any basis for engagement with CF."

To see all the upgrades/downgrades on shares of AGU, visit our Analyst Ratings page.

Agrium Inc. produces and markets agricultural nutrients, industrial products, and specialty products worldwide, as well as involves in the retail supply of agricultural products and services in North and South America.

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