While pharma megamergers have been grabbing the headlines lately, another fertile area for mergers and acquisitions is among the producers of plant nutrients. Problem is, no one's biting.
Since CF has decided to take the matter to shareholders with an exchange offer, Terra has to make its case for remaining independent. Setting aside the strange assertion that CF's offer is an "illusory proposal," here are some of the board's key arguments against a merger:
- Terra's shift toward urea ammonium nitrate (UAN), which commands a premium over ammonia, would be undone.
- The firm would lose the geographic advantages derived from both its inland plants (located away from the highly competitive Gulf Coast) and its low-cost natural gas supply from Trinidad (a locale also favored by PotashCorp
- CF lacks experience integrating major acquisitions, and its synergy estimates aren't convincing or compelling.
Terra also branded the move as "opportunistic." Where else have I heard that one? Oh right, CF's rejection of Agrium's offer yesterday.
Of course these moves are opportunistic! We're not talking about Blackstone
CF didn't have much more to say to Agrium in its brief letter, but we'll surely see further PR skirmishes as Agrium presses on with its own exchange offer. Stay tuned, Fools -- this one's going to get fierce.