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Wednesday, May 29, 2024

Yara drops huge takeover bid

It was expected to be the largest acquisiton in Norwegian history, but on Friday fertilizer giant Yara International felt compelled to abandon its bid to take over US rival Terra. Another rival came along and offered much more, and Yara opted out.

The Oslo-based company, one of Norway’s most international in scope, was left with wounded pride and a consolation prize of sorts: The equivalent of around NOK 730 million, which must be paid out to Yara if its deal with Terra was broken because of a higher offer.

So even after adding up the costs of its failed effort to become the world’s largest fertilizer company, Yara walks away with some handsome compensation. 

Company officials decided not to get into a bidding war with CF Industries, which offered much more than Yara’s NOK 24.3 billion. Investors had already sent Yara’s stock down on its initial bid, thinking it was paying too much.

Yara shares jumped when CF Industries’ offer emerged last week, and soared more than 7 percent again on Friday, when investors learned Yara wouldn’t bid more than CF Industries. The market thus seemed pleased the Yara-Terra merger fell apart.

“Yara’s offer was so high as a starting point that it was difficult to defend,” analyst Marianne Skeisvoll Bjørnsen of Argo Securities told financial news service TDN Finans. “As I see it, it was completely correct of Yara not to move forward with it.”

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