Agrium Bid: Bottom for Fertilizers?

Agrium Inc. (AGU) today made a hostile $3.6 billion bid for CF Industries (CF). The bid is for $72/share, which is a 30% premium to the previous day's closing price. It is one share of Agrium plus $31.70 in cash. Committed financing is in place from Canadian banks.

Agrium has been acquisitive, and recently completed the acquisition of UAP Holdings, a fertilizer distributor. This deal would triple Agrium's capacity to make phosphates and nitrogen-based fertilizers. There would be $150 million in synergies, and the deal is conditional on CF Industries dropping its bid for Terra Industries (TRA).

The deal would be accretive in 2010. Prices have fallen for fertilizers, along with other commodities. However, there has been some slight improvement in recent weeks, implying the market has hit a bottom.

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