CALGARY -- CF Industries Holdings Inc. (NYSE:CF) may have finally dropped its year-long effort to take over a rival, but that doesn't mean the U.S. fertilizer producer is warming up to a hostile bid from Calgary's Agrium Inc. (TSX:AGU).
"Agrium's offer is further away than it ever was from being compelling," CF said in a state-ment Friday.
After North American stock markets closed Thursday, CF announced it was abandoning its attempt to buy Sioux City, Iowa-based Terra Industries Inc. (NYSE:TRA), which had resisted the CF offer since it was first made a year ago.
Meanwhile, Agrium Inc.'s US$5.2-billion bid for Deerfield, Ill.-based CF has been ex-tended by a month until Feb. 22.
The Canadian fertilizer giant had made its offer of one Agrium share plus US$45 in cash for each CF share contingent upon CF dropping its bid for Terra.
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CF's decision to walk away from Terra doesn't guarantee Agrium a victory, said Mark Con-nelly, managing director of Wall Street brokerage firm Sterne Agee.
"There's a lot of people that think that Agrium will now gain control of CF, and it is cer-tainly possible. But we've got a long way to go between now and then," Connelly said.
"I think if Agrium is patient, they can improve the odds of being successful eventually. But I don't think that anybody should assume there's going to be any deal announced any time soon."
CF dropping the Terra bid is a positive development for the Canadian company, Agrium spokesman Richard Downey said.
"I think it improves our chances of being successful with CF," he said. "However, the issue is they've still got a lot of defences in place."
Agrium said Thursday it would try to have two of its own directors elected to CF's eight-member board of directors at the U.S. company's next shareholder meeting.
Agrium also wants to win CF shareholder approval to remove the company's so-called "poison pill" provision, which is meant to protect shareholders in the event of a hostile takeover by preventing unwanted suitors from taking up any of the shares tendered.
Agrium will probably be successful in both of those endeavours, but that still doesn't mean it will end up clinching a deal with CF, Connelly said.
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"At the end of the day the problem with all of this (merger and acquisition activity) from the very beginning a year ago is that there's no reason in the world why anybody should want to sell," he said.
"Somebody can come to me and offer me a lot of money for my house but that doesn't make me a seller."
In Friday trading, Agrium shares fell around four per cent to C$64.16 on the Toronto Stock Exchange and close to five per cent to US$62.22 on the New York Stock Exchange.
CF rose about three per cent, or US$3.20, to $96.39 on the New York stock market -- closer to Agrium's bid price of US$107.
Terra -- whose stock rose about two per cent to US$33.27 -- comes out the real winner, Connelly said.
"Despite the fact that there's no offer on the table, the market absolutely believes that Terra is a really outstanding company, because all else equal, Terra's supposed to be down today and it's up," Connelly said.
"Two years ago nobody knew who Terra was. Now everybody knows who Terra is."
