Notable Mergers and Acquisitions of the Day 11/4: TRA/CF, RHB, VCGH

November 4, 2009 10:34 AM EST

• Terra Industries Inc. (NYSE: TRA) announced that its Board of Directors, with the advice of its financial and legal advisors, has carefully reviewed CF Industries Holdings, Inc.'s (NYSE: CF) latest proposal to acquire Terra for the equivalent of $24.50 in cash (which equals the net value of CF's announced offer of $32.00 that will be reduced by Terra's previously declared $7.50 per share special cash dividend) and 0.1034 of a share of CF common stock, and unanimously rejected it as inadequate, opportunistic and not in the best interests of Terra and its shareholders.
  
  In rejecting CF's latest proposal, the Board considered a number of factors, including the following:
  
  * CF's proposal significantly undervalues Terra's near term and long term prospects, as illustrated by the following:
  o CF's November 2, 2009 presentation justifies its inadequate proposal using a 2010 EBITDA estimate for Terra of $525 million, which is in fact significantly less than Terra's projection of approximately $694 million.
  * Using CF's own proposed multiple of 6.7x1 Terra's projected 2010 EBITDA would indicate an enterprise value of $4.65 billion. Applying CF's own adjustments, this would imply an equity value of $51.55 per share for Terra.
  * Alternatively, using CF's mean NTM EBITDA industry acquisition multiple of 7.6x2 would imply an enterprise value of approximately $5.27 billion for Terra, which equates to $57.74 per share, a price which would still be substantially accretive to CF.
  * Terra's excellent near term outlook, particularly the strong fundamentals for nitrogen demand in the U.S. agricultural business in the coming growing season and moderate natural gas costs.
  * Terra's projected operating improvements in 2010, specifically revenue growth of more than 25% over 2009 and robust operating margins, which would result in EBITDA of $694 million for the year.
  * Terra's expansion of the UAN capacity at its Woodward facility, recognizing that UAN has been among the fastest growing nitrogen products in the United States.
  * Significant upside in Terra's Environmental Technologies business, which Terra expects to generate $400-500 million in DEF revenues by 2015.
  * Terra's ability to continue to make strategic and opportunistic acquisitions that build shareholder value, such as Terra's pending acquisition of a 50% interest in Agrium Inc.'s (NYSE: AGU) Carseland nitrogen manufacturing facility and its acquisition of Mississippi Chemical Corporation.
  * Terra's track record of delivering value to its shareholders in the form of stock buybacks and dividends, which have amounted to over $1.0 billion over the last four years, including the $750 million to be paid to all Terra shareholders in December as a $7.50 per share special dividend ($1.00-$1.50 of which is estimated as a tax-free return of capital).
  
  "CF's latest proposal fails to appropriately value Terra's world class assets, strategic advantages and prospects," said Terra President and CEO Michael Bennett. "Terra is a preeminent pure play nitrogen company, and through the continued execution of our strategy is well positioned to take advantage of an upsurge in demand from our agricultural and industrial customer base as the economic recovery continues."
  
  "Terra's Board has a proven record of building Terra's market position and delivering shareholder value," said Henry R. Slack, Chairman of the Board of Terra. "Terra's Board and management team always have and will continue to remain open to considering any bona fide opportunity to create meaningful value for Terra shareholders."
  
  
• RehabCare Group, Inc. (NYSE: RHB) entered into a definitive merger agreement with Triumph HealthCare, a leading developer and operator of long-term acute care hospitals (LTACHs) in the U.S., for a purchase price of $570.0 million, subject to adjustment.
  
  Triumph’s trailing 12-month revenues through September 30, 2009 were $439.7 million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $89.7 million.
  
  
• This morning, VCG Holding Corp. (Nasdaq: VCGH) disclosed that is has received a non-binding letter of intent on November 3, 2009 from the Company's Chairman and CEO, Troy Lowrie and related firms to acquire all of the outstanding common stock of the Company for $2.10 per share in cash.
  
  The Company's Board of Directors has formed a Special Committee consisting solely of directors who are independent under the NASDAQ independence rules to review and evaluate the Proposal and to recommend to the Company's Board of Directors whether or not to approve or decline the Proposal.

To see all the Mergers & Acquisitions for today in real-time go to http://www.streetinsider.com/Mergers+and+Acquisitions

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