CF industries Increases Bid on Terra (CF, RA, AGU)

Fertilizer maker, CF Industries Holdings (NYSE: CF) , has announced that they were raising their bid for Terra Industries (NYSE: TRA), adding $4.75 a share to their previous bid. With the revisions, CF Industries’ new bid would be worth $36.75 in cash as well as 0.1034 shares of CF industries for each share of Terra Industries. The pricing includes a $7.50 dividend.

CF industries’ Chief Executive, Stephen Lewis, is confident that the offer would be seriously considered since the bid represents a premium that is over 50% above the unaffected share price after dividend payment.

Lewis adds that the price of the bid is above the historical and recent transaction premiums since it is more than ten times the EBITDA of Terra. It also helps that CF industries has installed three directors in Terra’s board, making sure that CF industries is well represented in the meetings about the takeover.

Experts see the bid as a means for CF industries to escape a takeover attempt from Canadian Fertilizer producer Agrium (NYSE: AGU) . Agrium has expressed in the past that if the transaction come to fruition, they will abandon their takeover attempt.

With the bid weighing down on CF industries, their shares fell sharply last Friday, losing 2.88% to $88.04 a share. With the news of the takeover, Terra Industries surged 6.3% $41.52 a share. Agrium Inc. also rose with a gain of over 4% to reach $59.84 a share.