March 5, 2010 / 1:25 PM / 10 years ago

UPDATE 2-CF commences exchange offer for Terra shares

* Exchange offer expires on April 2

* CF says offer is far superior to Yara’s in value

* Terra says board to review offer

* Terra shares up 2.1 percent

* CF shares down 3.5 percent (Adds Terra shareholder comment, Terra board response, updates share movement, adds NEW YORK to dateline)

By Euan Rocha and Ernest Scheyder

TORONTO/NEW YORK, March 5 (Reuters) - Fertilizer maker CF Industries (CF.N) formally launched an exchange offer for all of the outstanding shares of Terra Industries TRA.N, claiming its offer is superior to Yara’s current offer for the company.

Earlier this week, CF relaunched its hostile bid for Terra, betting that a higher price of $4.75 billion would help it break up Terra’s planned takeover by Norway’s Yara International (YAR.OL). [ID:nN02142573]

Terra said its board will review the offer and contrast it with Yara’s offer. The company did not provide a timeline for the review and encouraged its shareholders to do nothing in the interim.

Shares of Terra rose 2.1 percent to $45.72 in afternoon trading, while shares of CF were down 3.5 percent at $104.48.

CF’s bid for Terra had already been cleared by regulatory authorities when it was originally proposed a year ago.

“Any offer from Yara must be heavily discounted since it would take at least four months to close, compared to under 30 days for our offer,” CF Chief Executive Stephen Wilson said in a statement.

“Yara’s offer should be discounted further for the significant risks to closing, such as a required two-thirds stockholder vote, required legislative action, and U.S. and European anti-trust approvals,” he said.

CF said its exchange offer will expire on April 2.

CF, which is currently fighting off a hostile takeover attempt from Agrium Inc AGU.TO, said its offer consists of $37.15 in cash and 0.0953 CF share for each Terra share, or about $47.46 based on Thursday’s closing prices.

Jeffrey Doppelt, who says he controls about 147,500 shares of Terra together with his family, called CF’s boosted offer “fair” and said he would be surprised if it did not go through.

“I think this is a deal that makes sense,” Doppelt told Reuters. “I certainly like this deal better than an all-cash one.”

The deal would dilute the stake of current CF shareholders and would create one of the continent’s largest producers of nitrogen, an essential fertilizer for farmers. (Reporting by Ernest Scheyder and Euan Rocha, editing by Dave Zimmerman and Matthew Lewis)

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