NEW YORK - Fertilizer maker CF Industries Holdings Inc said on Monday it has acquired a 7 percent stake in Terra Industries Inc in its latest move to buy the company.
CF, which has launched an unsolicited effort to take over Terra, said it purchased 6.99 million shares in the open market over the past two weeks for $247 million.
CF, which is also fending off a hostile takeover offer from Agrium Inc, has been trying to buy Terra since January, and said in August that it was prepared to pay 0.465 of a share for every Terra share. That would put CF's bid at around $4 billion.
Terra, also a fertilizer maker, has rejected the overture, and last week announced it would be pay shareholders a special $7.50 per share dividend.
Analysts see Terra's special dividend, which will result in about $750 million being distributed to shareholders, acting as a deterrent to CF.
Terra is definitely making it harder for CF to buy them, with this poison pill, said Broadpoint AmTech analyst Edlain Rodriguez.
However, CF said it is confident that both Terra's and its own stockholders support this business combination and that both sets of stockholders recognize its strategic merits.
Terra stockholders will have significant ownership in the combined company and share in real and substantial synergies, CF Chief Executive Stephen Wilson said in a statement.
Stockholder approvals from both Terra Industries and CF Industries would be required for any deal to go ahead, unless Terra elects to not require CF Industries stockholder approval by structuring a transaction to include CF Industries preferred stock.
The New York Stock Exchange requires existing shareholders of a company to approve any transaction in which a company plans to issue more than 20 percent of its outstanding common shares. This rule does not apply in the case of preferred shares.
CF has already received U.S. and Canadian antitrust regulatory approvals for its takeover proposal.
Shares in Terra were up 3.4 percent at midday at $36.37, while CF shares rose 1.3 percent to $85.35 on the New York Stock Exchange. (Reporting by Euan Rocha and Matt Daily, editing by Gerald E. McCormick and Peter Galloway)