Yara ponders competing bid for Terra

Bookmark and Share

Executives at the big Norwegian fertilizer firm Yara remained mum on Thursday, as some analysts predicted their takeover bid for rival Terra Industries of the US would fizzle. At least Yara’s stock seemed to stabilize, after falling earlier in the week.

Yara’s stock also fell two weeks ago when it announced what was said to be the biggest takeover attempt in Norwegian history: A bid for Terra valued at NOK 24.3 billion. While some commentators praised the bold move, investors seemed to think it was too expensive and drove down the price of Yara’s shares by nearly 7 percent.

On Tuesday, another player in the fertilizer business, CF Industries, launched a competing bid for Terra. CF Industries is willing pay even more than Yara for Terra, meaning Yara would need to come up with another NOK 3.7 billion to match it.

Yara’s biggest single owner is the Norwegian state, and the government minister in charge of business and trade had said the state would back the initial bid. Whether the state is willing to up the ante remained unclear.

Investors once again seemed skeptical to a higher bid, driving the price of Yara shares down another 4.4 percent after CF Industries’ higher bid emerged. Analysts seem split, with some telling Reuters and newspaper Dagens Næringsliv that they doubted Yara would match CF Industries’ bid while others thought Yara would boost its offer. Yara board member Frank Andersen said he doubted Yara would raise its price.

If Yara gives up its bid for Terra, it won’t walk away empty-handed. Both Dagens Næringsliv and Aftenposten reported that Yara cut a deal with Terra calling for a penalty payment of USD 123 million (around NOK 730 million) if Terra is ultimately taken over by a competing bid.

After closing at NOK 239.90 on Wednesday, Yara shares were trading at 238.90 on Thursday afternoon.

By Views and News staff