DEERFIELD, Ill. -- CF Industries Holdings Inc. today announced that it has acquired approximately 7 percent of Terra Industries Inc. in the open market over the past two weeks.

CF Industries has purchased 6,985,048 shares at a cost of $247 million. CF Industries also announced that it has sent a Merger Agreement to Terra Industries detailing the terms of its proposed business combination. The proposed 0.465 exchange ratio represents a premium of more than 35 percent.

Under the Merger Agreement:

  • The exchange ratio would be 0.465 of a share of CF Industries for each share of Terra Industries.

  • The 0.465 exchange ratio would be adjusted upon declaration by Terra Industries of its announced $7.50 per share dividend, based on the average trading price of CF Industries' shares during a period prior to the closing.

  • Five million Contingent Future Shares would be distributed to CF Industries stockholders, which would convert based on CF Industries stock trading above $125 a share, increased from $115 a share to reflect the overall increase in the market.

  • Stockholder approvals from both Terra Industries and CF Industries would be required, unless Terra elects to not require CF Industries stockholder approval by structuring the transaction to include CF Industries preferred stock.

  • There would not be any "break-up" fee.

  • There would not be any condition relating to U.S. or Canadian antitrust regulatory approvals, since CF Industries has satisfied these regulatory conditions regarding the proposed business combination with Terra.

  • "Our proposal provides a very significant premium to Terra stockholders, which is above historical premiums for stock transactions," said Stephen R. Wilson, chairman, president and chief executive officer of CF Industries. "Terra stockholders will have significant ownership in the combined company and share in real and substantial synergies. Our acquisition of 7 percent of Terra further demonstrates our commitment to the business combination. We are confident that Terra and CF Industries stockholders support this business combination and that both sets of stockholders recognize its strategic merits."

    The proposed business combination is subject to approval by the Terra Board of Directors and other customary conditions in the Merger Agreement, as well as confirmatory due diligence.

    The Merger Agreement is filed as an exhibit to the Schedule 13D CF Industries filed on Sept. 28, 2009.

    Morgan Stanley and Rothschild are acting as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to CF Industries.

    CF Industries Holdings Inc., headquartered in Deerfield, Ill., is the holding company for the operations of CF Industries, Inc. CF Industries Inc. is a major producer and distributor of nitrogen and phosphate fertilizer products.

    SOURCE: CF Industries Holdings Inc. via Business Wire.