CALGARY — Agrium Inc.’s (TSX:AGU) seven-month-long hostile pursuit of Illinois fertilizer company CF Industries Holdings Inc. (NYSE:CF) has been prolonged yet again, as the Canadian fertilizer giant exploits one of the few available avenues in gaining control of its reluctant takeover target.
“We knew full well that there was going to be a process associated with it and it would take some time,” said Agrium spokesman Richard Downey in an interview Monday.
The more than US$4-billion offer, which has been sweetened twice and repeatedly extended, was to have expired Wednesday, but is now open until Sept. 22.
Originally made in late February, the bid consists of US$40 in cash plus one Agrium share for each CF share. Based on Agrium’s share price close on Monday, the deal is worth about US$4.15 billion.
Agrium has been framing its pursuit as a shareholder referendum, because CF’s shareholder rights plan, or “poison pill”, prevents a would-be buyer from taking up shares tendered to its offer.
The fact that CF is a U.S. company registered in Delaware further complicates the transaction, said Kevin Morris, co-head of law firm Torys LLP’s corporate and capital markets practice.
“There’s more power for the board in the States,” he said.
In Canada, poison pills are designed to give a takeover target time to look for a white knight bidder or examine other alternatives. However, in the United States, poison pills can exist indefinitely.
“Boards are given a lot more discretion in the U.S. to let rights plans just sit there, as opposed to in Canada where eventually they’re rendered ineffective,” Morris said.