CF Industries Buying Terra

Friday, CF Industries (CF) announced that it is buying Terra Industries (TRA) in an all-stock combination of 0.42 shares of CF per share of Terra. The overall value will be $2.1 billion.

The new company will be owned 53% by CF shareholders and 47% by Terra shareholders. It will be the global leader in nitrogen fertilizers (which will be 82% of sales) and there will be cost savings of $100 million or more (mostly purchasing, SG&A and working capital).

This deal will be accretive in year two. This may be a sign of things to come, as low valuations may spur some M&A activity as public values have fallen below private market values and it is cheaper to buy that build fertilizer assets.

Read the full analyst report on CF.

Read the full analyst report on CF

Read the full analyst report on TRA