Tuesday, February 16, 2010

AGU, CF, TRA - It Takes 3 to Tango? Takeover Commotion & Trades

TRA is trading up 22.5% to 40.73. CF is trading up 2.7% to 103.25. AGU is trading up 2.5% to 65.89. The LIVEVOL™ Pro Summaries are below.

Here's a quick summary of the last year:

(1) 1-16-2009: CF bids for TRA $2.1 billion (all stock)
Proposed Exchange Ratio of 0.4235 Shares for Each Terra Share. Transaction Offers shareholders of Terra a Premium of 34% Over 30-Day Volume Weighted Average Stock Prices of the Two Companies' Respective Shares.
Reference Here

(2) 2-4-2009: CF goes hostile over TRA
CF Industries (Deerfield, IL) says it will launch a hostile bid for Terra Industries, and will nominate three members to replace three of Terra's current board members. The hostile bid comes after Terra's board rejected the $2.1 billion bid from CF Industries. Terra's board said CF's bid, which would allow the holder of each common share in Terra to receive 0.4235 shares of CF Industries, undervalues the company.
Reference Here

(3) 2-25-2009: AGU bids $72 per share for CF
Agrium Inc. (NYSE: AGU) submitted a proposal to the board of directors of CF Industries Holdings, Inc. (NYSE: CF) to acquire all of the capital stock of CF for cash and Agrium shares at $72.00 per CF share, or a total of approximately $3.6-billion, based on yesterday's closing price of Agrium shares.
Reference Here

(4) 5-11-2009: AGU ups bid to $82.50 per share for CF
Shares of AGU are trading lower today after the company increased its buyout bid for CF Industries (CF). AGU upped the cash portion of the bid to $40 per share, from $35. The deal is now worth approximately $82.50 per CF share.
Reference Here

(5) 5-18-2009: CF rejects AGU
CF Industries Holdings, Inc. (NYSE: CF) announced that its board of directors has rejected Agrium Inc.'s (NYSE: AGU) latest revised offer to acquire all outstanding shares of CF Industries.
Reference Here

(6) 11-05-2009: AGU ups-bid to $101.90 per share for CF
AGU offers one share of AGU + $45.00 in cash for each share of CF. This implies a deal value of $101.90 per CF share

(7) 11-19-2009: CF rejects AGU again
More than 60 percent of CF Industries (CF.N) shares were tendered into Agrium Inc's (AGU.TO) nearly $5 billion hostile offer for the fertilizer maker, but the majority as not compelling enough to convince investors that a deal is likely.
Reference Here

(8) 12-07-2009: CF re-ups (again) for TRA (8th time)
CF Industries (CF) is offering 0.1034 of a share as well as $36.75 in cash, including the $7.50 per share special dividend declared by Terra. This would value TRA shares at $45.91. The deal would be valued at $4.58 billion. The move is the latest chapter in a year-long, three-way takeover battle and lifts CF's offer to more than double the $2.1 billion it originally proposed in January4 and 12/7
Reference Here

(9) 1-14-2010: CF walks away from TRA
CF Industries Holdings Inc. (NYSE: CF) announced that it has withdrawn its hostile takeover bid for Terra Industries Inc. (NYSE: TRA), ending what has been a long and complex merger battle between the companies.
Reference Here

(10)2-16-2010: Yara bids $41.10 ($4.52 billion) for TRA
Yara International bids $41.10 per share of TRA (dividend already paid).

As we sit today, TRA is getting bought out for $41.10 (after the $7.50 dividend was paid) and the stock is trading close to that range. AGU is bidding 1 share ($65.89) + $45.00 = $110.89. CF is trading ~$6.50 below that right now. CF is committed to walking away from AGU; AGU is committed to buying CF.

TRA bid ostensibly more than doubled. CF bid went from $72 to now over $110.
Is there a way to trade this? Let's look at the headlines buy themsleves:
(1) CF bids for TRA $2.1 billion
(2) CF goes hostile over TRA
(3) AGU bids $72 per share for CF
(3a) CF rejects AGU (implied from news stories)
(4) AGU ups bid to $82.50 per share for CF
(5) CF rejects AGU
(6) AGU ups-bid to $101.90 per share for CF
(7) CF rejects AGU again
(8) CF re-ups (again) for TRA (8th time) (more than double prior bid)
(9) CF walks away from TRA
(10) TRA gets bid $4.52 billion from Yara

This is trade analysis, not a recommendation.

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