March 16, 2010 / 3:16 PM / 10 years ago

CF surprised Terra deal took so long

CHICAGO (Reuters) - CF Industries (CF.N) Chief Executive Stephen Wilson defended the $4.7 billion purchase price for Terra Industries Inc TRA.N, adding that the biggest surprise to him was that the marriage of the two fertilizer companies took more than a year to accomplish.

Chairman, President and CEO Stephen Wilson of CF Industries Holdings Inc., speaks during the Reuters Food and Agriculture Summit in Chicago March 16, 2010. REUTERS/Jeff Haynes

CF’s agreement to acquire Terra last Friday ended a 14-month battle in which CF was alternately cast as both the hunter and hunted.

CF had initially offered $2.1 billion in stock back in January 2009. In the end, its final stock and cash offer of $4.7 billion scuppered Agrium Inc’s AGU.TO efforts to snap up CF, while forcing Norway’s Yara (YAR.OL) to bow out of a bidding war for Terra.

“I believe our stockholders will benefit from this transaction at this level. Obviously, if you could buy it for less you buy it for less, but we didn’t get that done,” Wilson said at the Reuters Food and Agriculture Summit in Chicago on Tuesday.

“What surprised me the most was the amount of time it took from the starting point to announcing the finish line,” Wilson said, adding that the tumultuous deal process did not create a lasting bitterness between chief executives in the industry.

“I know all these individuals, we see each other at industry meetings on regular basis,” said Wilson. “We’re all professionals who respect each other and this was all about business. It was never personal.”

The acquisition of Terra makes CF the largest producer of nitrogen-based fertilizers in North America and the world’s second-largest behind Yara. The other three major players in the North American nitrogen arena are Agrium, Potash Corp POT.TO and privately held Koch Industries.


Deerfield, Illinois-based CF now faces integrating Terra at the start of the U.S. spring planting season, an especially important time for the fertilizer industry after wet weather and a late harvest hurt fertilizer application last fall.

“The fundamentals are set up very well. We want to make sure we don’t fumble that opportunity while we integrate the two companies,” said Wilson, who expects 89 million acres of corn to be planted this spring.

CF will use its own management and external expertise to smooth out the integration process, Wilson said, adding that he had several executives in mind for the integration team and would make the list public soon.

Wilson said it is “premature” to discuss what CF will do with Terra’s assets, including its headquarters in Sioux City, Iowa. He also declined to discuss whether Terra CEO Mike Bennett or any Terra board members would join the new CF.

The company continues to see South America as its primary region of growth, and work is moving ahead on a proposed nitrogen facility in Peru, Wilson said. Nitrogen is the most essential fertilizer for farmers, and the facility would make CF the only nitrogen producer on the Western Hemisphere’s Pacific coast.

CF expects an average natural gas price of $5.05 per million British thermal units for 2010, though Wilson declined to discuss expectations for phosphate pricing. Phosphate is the second-most important fertilizer for farmers, after nitrogen, and CF is a large supplier.


Wilson, a native of Hershey, Pennsylvania, attended college and graduate school at Northwestern University, and he remains an active fan of the school’s basketball and football teams.

The head of one of the world’s largest fertilizer producers concedes that he has never worked on a farm.

He spent 12 years at Inland Steel and joined CF in 1991, helping it go public in 2005.

Wilson speaks slowly, and carefully chooses his words, though at times he is passionate in expressing his views.

Asked to comment on organic farming — a movement that unsettles many fertilizer distributors because it shuns inorganic fertilizers — Wilson was direct.

“If we aim to feed the world through organic agriculture, we would have millions of starving people,” said Wilson, who wears dress shirts monogrammed with his initials. “Those kinds of farming techniques don’t provide the yields necessary to create the abundance we have today.”

Though he personally avoids salt and takes medication for high blood pressure, he is opposed to government efforts in New York and other cities to ban or label sodium content in restaurant food.

“People make a choice every day about what they do,” he said. “Adults should be treated like adults. I’ve taken to reading food labels.”

Reporting by Ernest Scheyder, Euan Rocha, Brad Dorfman, Phil Wahba, Jessica Wohl and Lisa Baertlein; editing by Michele Gershberg and Matthew Lewis

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