Shares of chemical manufacturer CF Industries Holdings Inc. (CF) fell 1.82% and closed at $93.19 after it pulled out its offer to acquire rival fertilizer company, Terra Industries Inc. (TRA). CF Industries announced yesterday that it is no longer pursuing the acquisition deal.

Deerfield, Illinois-based CF Industries has been pursuing a hostile acquisition of Terra since January of last year. However, Terra’s shareholders has been repeatedly rebuffing CF’s offer. In its last bid, CF had increased its offer price for Terra by 12% to $4.6 billion. CF Industries had bought about 7% of Terra, which it claims to have sold with a net gain that more than offset the expenses it incurred in connection with its proposed acquisition. Terra shares closed Thursday up 5 cents at $32.66, but lost $3.61 in aftermarket trading.

CF Industries now is likely to focus on fighting off its own hostile takeover by another rival Agrium Inc. Calgary, Alberta-based Agrium Inc. (AGU), has pursued CF for nearly a year in an effort to block its rival’s grab for Terra, allowing CF to become the larger competitor. Agrium Inc. is a major retail supplier of agricultural products and services in both North and South America and a leading global producer and marketer of agricultural nutrients and industrial products.

In November 2009, CF Industries rejected Agrium’s $5 billion acquisition offer on grounds of valuation. On Thursday, Agrium extended the offer to February 22. Agrium remains firm on acquiring CF. Agrium also notified that it plans to nominate two independent directors for election to CF’s Board of Directors at its 2010 annual meeting of stockholders. CF Industries has yet to schedule the annual meeting. Under Delaware law, the company is supposed to hold it within 13 months of the previous meeting, which was held in April 2009.

As the economy declined, demand for fertilizers from farmers decreased, driving down prices that fertilizer companies charge as well as the price of their shares. CF Industries’ decision to abandon its bid partly ends the three-way battle for control of the North American fertilizer business.

Zacks Investment Research

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