Terra Rejects CF Industries' Bid ... Again

SIOUX CITY, Iowa (TheStreet) -- For the sixth time, Terra Industries(TRA Quote) has spurned its suitor, rival fertilizer concern CF Industries(CF Quote).

On Monday, CF had sweetened its bid for Terra after five earlier tries, offering $32 in cash plus a fraction of a CF common share for each Terra share, lifting the value of the proposed deal to about $4.1 billion, or $40.61 a share.

Terra shares ended trading Tuesday at $34.88; in premarket trading Wednesday, they were changing hands at $35.

Terra -- which has hired two anti-takeover heavyweights, the New York law firms Cravath Swain & Moore and Wachtell Lipton, to help it thwart CF's advances -- said in a press release Wednesday morning that its board has "unanimously rejected [the bid] as inadequate, opportunistic and not in the best interests of Terra and its shareholders."

There may be at least some merit to Terra's claims. It's been understood that CF has pursued Terra largely as a way to put off the advances of its own unwanted suitor, Agrium(AGU Quote).

As for Terra, it said it continues to feel the CF offer "undervalues" the company. Its board went so far as to suggest a price at which it might agree to a deal. Using several of CF's own metrics, including a multiple of 6.7 times earnings before interest, taxes, depreciation and amortization, and an "industry acquisition multiple" of 7.6 times mean EBITDA, Terra said its enterprise value would be $4.65 billion using the former model and $5.27 billion the latter, or $51.55 and $57.74 per share, respectively.