US firm in surprise bid for Terra

Yara’s planned acquisition of rival fertiliser manufacturer Terra could be in jeopardy following a surprise takeover bid by US firm CF Industries.

Following the Scandinavian fertiliser giant’s offer of $4.1bn some three weeks ago (FW 19 February), the American company this week submitted a £4.7bn cash-and-shares bid for Terra to break up the deal.

A Yara board member is reported to have stated that the Olso firm has no plans to raise its offer following CF’s move.

The battle over Terra, which produces nitrogen-based fertiliser products in North America and the UK, is part of a flurry of merger activity in the sector, with deals worth more than $10bn announced already this year.

According to the Financial Times, this is driven by an upwards trend in fertiliser prices and a belief that the need to extract greater yields from agricultural land means robust future demand. These deals include South American company Vale spending nearly $5bn on fertiliser assets in Brazil.

CF Industries believes it can extract cost savings of $135m a year from a tie-up with Terra – well over double the $60m expected by Yara.

The company is one of the largest manufacturers and distributors of nitrogen and phosphate fertiliser products for agricultural and industrial use in North America.