* Raises cash component of its bid by $5/shr
* New bid worth about $4.18 bln, based on Friday's close
* CF shares rise 3.2 percent in afternoon trade
(Adds Agrium CEO's comments. In U.S. dollars unless noted)
By Euan Rocha
TORONTO, May 11 Canadian fertilizer maker
Agrium Inc (AGU.TO) raised its offer for U.S. rival CF
Industries (CF.N) to about $4.18 billion on Monday, after CF
spurned Agrium's two earlier proposals.
Agrium is now offering CF shareholders $40.00 in cash plus
one Agrium share for each CF share, which is an increase of
$5.00 per share, or 14.3 percent, in the cash consideration.
"We believe this increase is not totally surprising, and
Agrium has sufficient cash and facilities in place to cover the
increase in cash consideration," said UBS analyst Brian
MacArthur in a note to clients.
However, recent spreads in the market raise doubts about
whether Agrium will succeed in its bid, MacArthur said.
CF's shares were up 3.2 percent at $76.20 on the New York
Stock Exchange on Monday, well below the implied value of
$85.20 a share for Agrium's offer, based on Friday's close.
Agrium said that as of May 8, about 1.27 million shares of
CF have been tendered to its offer. That accounts for about 2.6
percent of CF's 49.1 million diluted common shares outstanding,
according to a recent regulatory filing.
Agrium, in February, offered CF stakeholders one Agrium
share and $31.70 in cash for each share. It boosted the cash
portion of the offer to $35 per share a month later, which at
the time made the offer worth about $3.68 billion.
Agrium said it has attempted to meet with CF's management
and financial advisers to discuss a transaction, but its
attempts have been unsuccessful.
"CF has repeatedly rebuffed our efforts to meet, leaving us
no choice but to take our increased offer directly to CF
stockholders. It is time for CF stockholders to tell the CF
board to come to the table," Agrium Chief Executive Mike Wilson
said in a statement.
CF Industries said its board of directors will evaluate the
revised proposal carefully.
CF itself has launched a hostile takeover bid for U.S.
rival Terra Industries TRA.N. CF has said that Agrium's
proposal is an attempt to interfere with its bid for Terra.
CF has structured its all-stock offer for Terra in such a
way that its own shareholders will not have the opportunity to
vote on the proposal. Agrium's bid for CF is contingent on CF
dropping its bid for Terra.
In an interview with Reuters, Agrium's CEO said he finds it
interesting that CF can stand up in front of a crowd and ask
Terra to engage in talks with them, while CF itself is refusing
to engage in talks with Agrium.
"I just fail to see how they can talk out of both sides of
their mouth," said Wilson.
Wilson said he thinks CF's shares still trade at a
substantial discount to Agrium's offer, as CF's shareholders
see its board as being totally entrenched and unwilling to
engage with Agrium at this point.
"I think what you are getting is a few people saying that
CF is totally entrenched, CF doesn't care about its
shareholders and CF's management will do what it wants to do,"
CF Industries declined a request to speak with its chief
executive, saying that it would not be prudent for the CEO to
comment on the revised Agrium proposal, before its board had a
chance to review the new offer.
Agrium said its offer is not subject to financing
conditions. The company said it has sufficient cash resources
and committed financing underwritten by Royal Bank of Canada
(RY.TO) and Bank of Nova Scotia (BNS.TO) to fund the cash
portion of the offer.
Agrium said it has extended the expiration date of the
exchange offer until June 15. The exchange offer was previously
set to expire May 19.
RBC Capital Markets, Goldman Sachs (GS.N) and Scotia
Capital are acting as Agrium's financial advisers, while Morgan
Stanley (MS.N) and Rothschild are acting as advisers to CF.
Agrium's shares were down 1.4 percent at $44.56 in
afternoon trade on the New York Stock Exchange.
(Reporting by Euan Rocha, editing by Frank McGurty)