CF Industries Boosts Bid for Terra Industries by $4.75 Per Share (CF,TRA)

by Chip Brian

cf12/7/2009-CF Industries (NYSE:CF) boosted its buyout offer for Terra Industries (NYSE:TRA) by $4.75 per share.

CF's new offer for Terra is for $36.75 in cash and 0.1034 of a share of CF Industries common stock for each Terra share.

The new offer has a total value of $45.91 per share, based on CF's closing value on Friday.

The cash portion includes the $7.50 per share dividend announced by Terra.

"We have made a compelling offer, which represents more than a 50% premium to what we believe would be the terra1unaffected trading price for Terra," said Stephen R. Wilson, chairman, president and chief executive officer of CF Industries.

"It is time to sign a merger agreement and put these two great companies together."

The following letter was sent to Terra's Board of Directors last Friday: Board of Directors Terra Industries Inc. Terra Centre 600 Fourth Street P.O. Box 6000 Sioux City, Iowa 51102-6000 Attention: Henry R. Slack, Chairman of the Board Michael L. Bennett, President and Chief Executive Officer Dear Members of the Board: It is clear that Terra Industries stockholders want and expect a transaction now. To that end, we are increasing our offer by $4.75 per share in cash. Our new offer is $36.75 per share in cash ($29.25 net of the $7.50 dividend), plus 0.1034 of a share of CF Industries common stock. Our offer has a value of $38.41 per Terra share (net of the $7.50 dividend) based on our closing price today, and represents a premium of over 50% to what we believe is Terra's unaffected share price after payment of the dividend. That premium is substantially above historical and recent transaction premiums. Our offer also represents a multiple of 10X estimated EBITDA for 2009. Our offer is not subject to financing and CF Industries has satisfied all antitrust regulatory conditions required to close the transaction. We have provided a form of merger agreement that we are prepared to enter into. The merger agreement has a "go-shop" period and we would agree to a break-up fee of $1 per Terra share, plus expense reimbursement. Our offer is subject only to confirmatory due diligence and entering into the merger agreement. Our advisors are providing a due diligence list to your advisors and we believe due diligence could be completed over this coming weekend. We are prepared to meet immediately and to sign a merger agreement before the market opens on Monday, December 7th. Sincerely, Stephen R. Wilson Chairman, President and Chief Executive Officer CF Industries Holdings, Inc.