The Successful Investor Hotline – Friday, March 13, 2009

Article Excerpt

AGRIUM INC., $46.00, Toronto symbol AGU, may now mail its $67.75 cash-and-stock offer to buy U.S.-based fertilizer producer CF Industries Holdings Inc. (New York symbol CF), directly to CF’s shareholders, now that CF’s management has rejected it (all amounts except share price in U.S. dollars). CF’s stock is now trading at $68.61, which indicates that investors anticipate a higher bid. Agrium’s offer for CF is worth roughly $3.3 billion (56% of the offer is stock and 44% is cash). This is a big acquisition for Agrium, which earned $1.3 billion, or $8.34 a share, in 2008 However, CF has a shareholder-rights plan that lets shareholders buy new shares at half the market price if an investor tries to buy more than 15% of the outstanding shares without the approval of CF’s directors. This makes hostile takeovers like Agrium’s less likely to succeed. Buying CF would increase Agrium’s annual revenue by 40%, to $14 billion. As well, Agrium’s management believes it can…

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