Terra Spikes After Proxy Advisor Backs CF

NEW YORK (TheStreet) -- Terra Industries(TRA Quote) shares rose sharply Friday afternoon after a proxy advisor recommended that Terra shareholders elect to the company's board a slate of three directors nominated by Terra's hostile suitor, CF Industries(CF Quote).

RiskMetrics, whose opinions have proven influential in past hostile-takeover-related shareholder votes, said in its report, "Although Terra shareholders may in the aggregate believe they deserve more than the current offer on the table, we note that the Terra board has had almost an entire year to find an alternative transaction or negotiate an agreed deal at a higher price with CF."

Terra immediately issued a press release countering RiskMetrics. The company spun the firm's opinion in a different light, of course, saying that "three out of four of the nation's leading independent proxy advisory firms" recommended that Terra shareholders tow the company line by reelecting Terra's current directors.

The advisors who supported Terra are Glass Lewis, Proxy Governance and Egan-Jones Proxy Services.

"We stronly believe that RiskMetrics reached the wrong conclusion," Terra said in the release, going on to argue once again that CF's bid undervalues Terra and "ignores the significant upside in Terra's strategy as the economic recovery continues. As we have repeatedly said, CF has had ten months to put a compelling offer on the table, yet its current proposal continues to be inadequate, opportunistic and not in the best interests of Terra shareholders."