CF Industries Buying Terra

Friday, CF Industries (CF - Analyst Report) announced that it is buying Terra Industries (TRA - Snapshot Report) 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.

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