February 4, 2009 / 2:01 AM / 10 years ago

UPDATE 1-CF Industries to go hostile in its bid for Terra

* CF to offer 0.4235 shares for every Terra share

* CF to launch exchange offer mid-month

* CF plans to nominate three directors for Terra’s board

* Terra again says CF’s bid is too low

NEW YORK, Feb 3 (Reuters) - Fertilizer maker CF Industries Holdings Inc (CF.N) on Tuesday said it plans to launch a hostile bid for rival Terra Industries Inc TRA.N later this month, moving forward with a bid that Terra has already rejected.

CF also said it plans to nominate three directors to replace three members of Terra’s board at this year’s annual meeting.

CF said it plans to start an exchange offer for Terra’s common stock at the middle of the month. The offer would give Terra shareholder 0.4235 CF shares, currently worth about $20.66, for every Terra share.

Terra shares closed at $21.09 on the New York Stock Exchange on Tuesday.

Terra reiterated that it believes CF’s bid does not present a compelling value for shareholders, as it is too low. It also said that many of its major shareholders have expressed support of Terra and its strategy.

“While we believe the Terra stockholders will support a combination by voting for our nominees, our preference continues to be to enter into a negotiated transaction,” CF Industries Chief Executive Stephen Wilson said in a statement. “We are confident that our offer represents full and fair value.”

Terra has a classified board with staggered terms. Three directors will be elected to serve a three-year term at this year’s annual meeting.

While it does not have a ‘poison pill’ shareholder right’s plan, it is incorporated in Maryland, which has some takeover laws that are favorable to targets. (Reporting by Michael Erman; Editing by Bernard Orr)

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