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Yara has received termination of the Terra merger agreement


Yara received termination from Terra Industries Inc of the merger agreement signed on 12th February. Yara is entitled to a USD 123 million break-up fee as stated in the merger terms.

If the CF Industries bid is concluded, they would replace Terra as partner with Yara in the JV ownership of GrowHow UK, and for Yara UK it continues to be ‘business as usual’ with no changes to our organisation and operations.

To remind you of the sequence of events leading up to this position:

12th February 2010:
Announcement from Yara International ASA and Terra Industries Inc that:

  • Yara had launched a bid to buy US fertiliser company Terra Industries Inc
  • A merger agreement had been signed by both Yara and Terra’s Board of Directors
  • The closing of the transaction was subject to approval by Terra’s shareholders, approval by Yara’s general meeting of the rights issue and approvals from relevant regulatory authorities
  • Integration between the two companies would not start until the bid had been accepted, which looked likely to be June 2010 at the earliest

3rd March 2010 :
A new offer was made for Terra Industries Inc by US company CF Industries which at $4.74 billion was higher than the Yara bid of $4.1 billion.

  • Yara’s merger agreement signed on 12th February with Terra involved Yara’s acquisition of all of the outstanding common stock of Terra for $41.10 per share in cash.
  • CF Industries proposal was to acquire all of the outstanding common stock of Terra for $37.15 in cash and 0.0953 of a share of CF Industries common stock for each Terra share.

Whilst Terra’s Board of Directors evaluated the terms of the CF proposal, Yara continued to have a merger agreement with Terra and the planned process continued.

10th March 2010:
Yara received notification from Terra Industries Inc that their board considered the bid by CF Industries to be a ‘Superior Proposal’ to the merger agreement signed on 12th February between Yara and Terra, and they gave the Yara Board five working days to match the CF offer.

12th March 2010:
Yara’s Board of Directors notified Terra Industries that it would not improve the cash merger agreement to match the CF offer. Yara’s CEO Jrgen Haslestad commented:” We have repeatedly said that we have no interest in participating in a bidding war in the US. Although the transaction makes strategic sense, it has to make financial sense also. There is a price limit to any growth project. Obviously we wanted to buy Terra, and we saw a great fit between the companies. But at the same time we knew that someone could come up with a higher bid. Thats part of business. It is better for us to leave the table as terms are getting disadvantageous than to pursue an investment with a high risk of diluting value for our shareholders.

The CEO said that Yaras growth ambition will continue: The US remains an attractive market for us and we will continue to search for opportunities to grow our business in the region. We remain the global leader in the fertilizer industry, and there will be more opportunities around the world to grow our business further.

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