(Adds analyst comments in paragraphs 5-6 and updates share
prices in last paragraph.)
DOW JONES NEWSWIRES
Agrium Inc. (AGU) boosted the cash portion of its hostile bid
for rival fertilizer maker CF Industries Inc. (CF) 10% as the
company looks to build shareholder backing for the takeover
effort.
CF said it's board would "evaluate" the new approach.
Agrium, which launched an exchange offer to CF shareholders last
week, also announced it will wage a proxy effort ahead of CF's
annual meeting next month.
The Candian company will recommend shareholders withhold votes
for CF's board nominees. The company has scheduled an investor call
for 11.00 a.m. EDT (1500 GMT).
An analyst said the addition of $160 million in the context of
Agrium's multi-billion-dollar bid for CF is essentially a "neutral"
event, but could be aimed at bringing CF to the table to hatch out
a friendly deal.
The analyst added that Agrium may not have held a call if not
for the "flogging" it took during CF's own investor call earlier
this week. While Agrium probably wants to "set the record
straight," the analyst expects the company to be "more
contained."
The moves are the latest in a three-way battle involving Agrium,
CF and Terra Industries Inc. (TRA).
Terra has rejected a hostile offer from CF, which has in turn
launched a proxy contest to replace three Terra directors at its
annual meeting in May.
Agrium said Friday it was boosting the cash portion of its CF
offer to $35 from $31.70. The stock portion of one share of Agrium
for one share of CF remains the same.
The latest offer values CF at $74.90 a share, 5.5% higher than
Agrium's initial bid of $72, or $3.6 billion in total. CF closed
Thursday at $74 as investors have been anticipating a higher offer
from Agrium.
"CF Industries' board of directors will evaluate the revised
proposal in the context of CF Industries' strategic plans to create
shareholder value, including its proposed business combination with
Terra Industries Inc.," said Chuck Nekvasil, director of public and
investor relations, in a emailed rsponse.
Agrium's president and chief executive, Mike Wilson, said its
improved offer shows the company's committment to closing the deal.
He also reiterated the offer is a much better alternative for CF
shareholders than their company acquiring Terra, which has
repeatedly rejected CF's approaches.
CF has so far rejected Agrium's advances, and Wilson said Friday
"we don't understand why CF would summarily reject our offer
without any attempt to negotiate a mutually beneficial
transaction."
The struggle comes as fertilizer producers look to take
advantage of the drop in sector stock prices since last summer to
buy up production capacity ahead of an expected rebound in
prices.
Agrium's exchange offer for CF is slated to expire at 12 a.m.
EDT (0400 GMT) on May 19.
CF shares are up 32 cents to $74.32 with Agrium 2.3% lower at
38.99 and Terra down 3.3% at $29.09.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com
(Doug Cameron and Andy Georgiades contributed to this article.)