* Agrium would sell 2 plants to Terra Industries
* FTC: conditions to preserve market competition
* Agrium and CF shares rise modestly
(Adds details, background; in U.S. dollars unless noted)
By Julie Vorman and Cameron French
WASHINGTON/TORONTO, Dec 23 Canadian fertilizer
maker Agrium (AGU.TO), which is attempting a hostile takeover
of U.S. rival CF Industries (CF.N), has won U.S. antitrust
approval of the proposed deal after agreeing to sell two
storage facilities, the Federal Trade Commission said on
The decision -- Agrium will have to sell CF's Ritzville
anhydrous ammonia terminal in the U.S. Pacific Northwest and
its own Marseilles terminal in Illinois, to Terra Industries
TRA.N -- clears a minor hurdle in the proposed CF takeover,
although it likely does little to resolve opposition from CF's
The divestment of the facilities is meant to preserve
competition in the farm fertilizer market, the FTC said.
Agrium will also give up exclusive rights to sell anhydrous
ammonia -- a type of nitrogen fertilizer widely used by farmers
to grow corn, soybeans and other crops -- produced at a Rentech
RTK.A plant in East Dubuque, Illinois, the agency said.
"Each of these markets is highly concentrated," the FTC
said, "and the proposed transaction would further increase
concentration levels by reducing the number of significant
competitors," which could in turn boost prices, the FTC said.
Agrium has offered $45 in cash plus one of its shares for
each share of Deerfield, Illinois-based CF, for a total value
of about $5.2 billion, based on Wednesday's prices.
The offer has received support from more than 62 percent of
CF's shareholders, but a poison pill and other defense measures
in place have prevented Agrium from forcing a deal.
The takeover is also contingent on CF dropping a separate
hostile bid for U.S. rival Terra.
Ray Goldie, an analyst at Salman Partners, noted FTC ruling
does not affect its key nitrogen production assets in Alberta,
which benefit from cheap natural gas.
"They don't have to give up any actual manufacturing of the
stuff," he said.
Shares of Calgary, Alberta-based Agrium were up 2.8 percent
at C$65.89 in Toronto and up 2.5 percent at $62.93 in New York
following the announcement. CF stock was ahead 2.7 percent at
$89.15, but well shy of the implied $107.45 per share value of
Asked why the agency had issued the ruling while the
outcome of the offer is still up in the air, FTC spokesman
Mitchell Katz said it was simply working within its normal
timelines following a request from Agrium for a ruling.
"If the companies want to pay up front to do a pre-merger
filing, we're under a timeline to make a ruling," he said.
A source close to Agrium said the company got the FTC order
to make it easier to get a deal if CF did decide to come to the
table, as CF had at one point raised some concerns about
regulatory uncertainties and antitrust issues around the deal.
Agrium has had talks with Terra about the possible
divestment if the CF deal does go through, the source said,
declining to be identified because the talks are private.
Agrium, CF and Terra declined to comment.
Under the consent order with the FTC, Agrium also agreed to
give antitrust regulators advance written notice if it plans to
buy an interest in any anhydrous ammonia assets during the
coming 10 years.
(Additional reporting by Paritosh Bansal in New York; editing
by Rob Wilson)