May 11, 2009 / 12:13 PM / 10 years ago

UPDATE 4-Agrium raises bid for CF Industries to $4.18 bln

* 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 (Reuters) - 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,” said Wilson.

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. ($1=$1.16 Canadian) (Reporting by Euan Rocha, editing by Frank McGurty)

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