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For a company that makes artificial fertilizer, CF Industries sure is full of scat



March 16, 2009 – Comments (1) | RELATED TICKERS: TRA.DL , CF , AGU

Apparently, Agrium, Inc. is trying to buy CF Industries. Great! I don't care, but I thought it was interesting that CF's board rejected Agrium's offer as "grossly inadequate." In this economic environment? Maybe CF's shareholders would be happy to take any capital gain they can get their hands on. But that's their business. As I said, I don't care.

But I got a letter from my broker a little while ago about a shareholder vote on CF Industries' offer to buy Terra Industries, Inc - a stock I own. I looked at the offer: a few shares of CF for every 10 shares of TRA, adding up to a premium of less than 10% at the time.

Considering my outlook for agriculture, and the shares of TNH that TRA owns (thanks for the heads up, GMX!), 10% is pretty small compensation for accepting shares of a company I know almost nothing about (and which pays a much smaller dividend yield).

So why should I accept CF's offer for my shares? 10% (in stock, not in cash) for a major player in an indsutry that will almost certainly outshine the broad economy over the next 2-4 years? I would call that "grossly inadequate" - to borrow from the eloquence of CF's board. How about 60%? Or 40% in cash?

I may well end up buying CF stock anyway. I like fertilizer stocks. I can't think of much else that's well positioned for the most likely outcomes in the future. But 10%? Come on! Let's get serious!

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