Fertiliser manufacturer Terra has confirmed that it has pulled out of its proposed merger with Norwegian producer Yara in favour of a rival bid from US fertiliser giant CF Industries.


The planned tie-up with Yara was announced last month, with Yara offering a $4.1bn package for the Terra business and describing the merger as “a perfect fit”.

It would have given Yara 30% of the US market and a 9% global market share.

But then CF Industries stepped in at the beginning of March with an offer that valued Terra at $4.74bn in cash and shares.

Terra wrote to Yara on 10 March giving company bosses five working days to come up with a better offer.

But last Friday (12 March) Yara told Terra that it would not increase the price.

“We have repeatedly said that we have no interest in participating in a bidding war in the USA,” said Yara chief executive Jorgen Haslestad. “Although the transaction makes strategic sense, it has to make financial sense also. There is a price limit to any growth project.

A joint statement from CF Industries and Terra then confirmed that they had eneterd into a “definitive merger” at the agreed valuation of $4.74bn.

“A combined CF Industries and Terra creates a strong leader in the global fertiliser industry that will generate long-term value for stockholders, more benefits for customers and increased opportunities to employees,” said CF Industries chairman Stephen Wilson.

CF Industries, which is one of the USA’s largest manufacturers of nitrogen and phosphate fertiliser, said at the time of its bid it could deliver cost savings for Terra of $135m, compared with $60m expected by Yara.

The initial merger proposal between Yara and Terra had already been signed by the directors of both companies.

A statement from Yara claims that it is entitled to compensation worth $123m as a so-called “break up fee”.

It also makes clear that, if the Terra/CF Industries merger is concluded, then CF Industries would replace Terra as the partner with Yara in the GrowHow joint venture in the UK.

“For Yara UK it continues to be ‘business as usual’ with no changes to our organisation and operations,” said a Yara statement.


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