December 23, 2009 / 3:05 PM / 10 years ago

UPDATE 2-Agrium has conditional US antitrust OK for CF deal

* 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 (Reuters) - 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 Wednesday.

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 board.

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 the offer.

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.

$1=$1.05 Canadian Additional reporting by Paritosh Bansal in New York; editing by Rob Wilson

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