Fertilzer Wars: Agrium Bids For CF Industries

Consolidation fever hits the fertilizer sector.

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Canada's Agrium is offering $3.6 billion for CF Industries, or $72 a share in cash and stock. The offer, a 30 percent premium to CF's Tuesday closing price, is the latest twist to the ongoing consolidation of the fertilizer industry where demand for potash, nitrogen and other chemicals boosted stock prices skyward last year in expectation of a long-lived boom in demand thanks to record food production and limited supplies of some key ingredients used to maximize agricultural output. The explosion in share prices for fertilizer makers was one of the biggest stock stories of most of 2008 -- until the stocks cratered late in the year along with the rest of the market. Shares now trade roughly around 2007 levels for the majority of those companies, and buyouts among the few largest players seems likely to continue.

Agrium says the deal would create efficiencies worth $150 million or so within three years of closing, and the combined company would generate revenue near $14 billion.

Back in January, CF Industries announced its $2.1 billion bid for rival Terra Industries, which has been mired in a proxy battle after Terra's board balked at the offer. Agrium's bid is contingent on CF dropping out of that deal.

For more on CF's bid for Terra, see Steven Davidoff. Agrium's press release for its offer is here.

  • Kirk Shinkle

    Kirk Shinkle is a senior editor for U.S. News Money and manages the Best Funds portal. Follow him on Twitter @KirkS or email him at kshinkle@usnews.com.

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