CALGARY — CF Industries Holdings Inc. (NYSE:CF) investors have another month to tender their shares to Agrium Inc.’s (TSX:AGU) hostile US$5-billion takeover offer, as support for the bid appears to be weaker than it was a month ago.
As of Friday at 5 p.m., about 25.2 million or about 52 per cent CF common shares had been tendered to Agrium and not withdrawn. That’s down from 30 million shares or 62 per cent of the total in mid-November.
Agrium spokesman Richard Downey called the level of support “incredibly high,” despite the decline.
“It tells you that people are still leaving it in there in the hopes that CF will come to the table,” he said.
“We were very surprised at the magnitude of the amount of shares that have remained in under the tender offer.”
The Canadian fertilizer giant’s hostile offer of US$45 in cash plus one Agrium share, which was to have expired at midnight Friday, has been extended until Jan. 22.
Based on the Monday afternoon price for Agrium’s shares on the New York Stock Exchange, its cash and stock offer was worth US104.83, up from $101.90 on Nov. 18.
“We remain committed to acquiring CF and continue to question how the CF board can justify not even responding to our Dec. 2 letter,” said Agrium chief executive Mike Wilson in a statement Monday.
In the letter, Agrium said it would try to get its own nominees installed on Deerfield, Ill.-based CF’s board of directors at the target company’s next shareholder meeting and reiterated the “compelling” nature of the offer.
“Agrium appreciates the continued support of the CF stockholders as evidenced by the stock tendered on Dec. 18, 2009. It is clear they would prefer to receive a premium versus pay a premium,” Wilson said.
The Calgary-based company also said Monday it has replaced its financing commitments with “highly confident” letters from Royal Bank of Canada (TSX:RY) and Bank of Nova Scotia (TSX:BNS).
Agrium’s previous financing arrangement was like a line of credit, which requires the company to pay a monthly fee. Now Agrium can be assured funding can be unlocked fairly quickly, without having the bear that extra cost, Downey said.
“The banks would take a look at what the outlook is for the industry and what your credit is. That’s just been improving over time,” Downey said.
“There’s no reason to think we couldn’t reinstitute the financing arrangement on very, very short order.”
Agrium has been chasing CF since February, but all of its overtures have been rebuffed. CF’s management has repeatedly declined invitations to negotiate with the would-be acquirer.
“CF Industries stated that Agrium’s offer is further away from being compelling than it ever has been,” CF stated Monday.
Agrium’s quest has been complicated by CF’s so-called “poison pill” provision, which is ostensibly meant to protect shareholders in the event of a hostile takeover by preventing hostile suitors from taking up any of the shares tendered.
Unlike in Canada, a poison pill can remain in effect indefinitely in most U.S. jurisdictions.
Essentially that means the acquisition can’t go through unless the CF board of directors is on side, even if a majority of shareholders are in favour of the offer.
CF has been embroiled in a hostile takeover battle of its own, chasing after U.S. rival Terra Industries Inc. (NYSE:TRA). Agrium’s offer is contingent upon CF dropping its pursuit of Terra.
Terra said last week that its board rejects CF’s offer as too low.
Agrium shares were ahead $1.21 or nearly two per cent to C$63.34 in midday on the Toronto stock market. In New York, they were at US$59.91, up $1.33.
On the New York Stock Exchange, CF shares fell 25 cents to US$86.19 — well below Agrium’s offer price.