We might be returning to an era when mergers are driven by companies who actually are thinking about business rather than high finance folks in New York City, Chicago, London or the like - thinking about financial engineering (i.e. private equity, hedgies, et al) What a concept - it's so old school. In a larger sense, if commodity stocks stay at these depressed levels for a longish period of time; I expect a lot more consolidation in the space by companies who actually have a vision out longer than 6-18 months.
- Fertilizer company Terra Industries Holdings Inc. said Friday it will consider an unsolicited $2.1 billion takeover bid by rival CF Industries Holdings Inc. Its shares soared 27 percent in morning trading. CF Industries made the all-stock offer late Thursday. The deal for Terra, which had 2007 revenues of $2.4 billion, would create a major fertilizer producer.
- Combined, the companies would be the largest publicly traded nitrogen fertilizer producer in the world, as measured by production capacity, CF said in a statement.
- CF Industries, based in Deerfield, Ill., said its proposal didn't depend on financing, though it said it may need to refinance Terra's debt.
- Citi Investment Research analyst Brian Yu said Friday in a client note the proposal is "a win-win transaction for shareholders of both companies due to the anticipated synergies, 100 percent stock deal that allows for continued participation by Terra shareholders, and welcomed consolidation in a globally fragmented market."
- He said a cash deal "would not 'fly' because of CF's conservative management team and likely objection by Terra to 'cashing-out' at arguably trough valuations."
- Terra has been struggling recently to cope with the steep decline in demand for ammonia and has idled production at certain facilities in a bid to keep inventory and working capital under control.
No position
