Terra-CF-Agrium Deal Drama Continues

NEW YORK (TheStreet) -- In the latest chapter of the Fertilizer Wars, Terra Industries(TRA Quote) has retrenched in its effort to thwart a hostile takeover bid from CF Industries'(CF Quote) -- or, possibly, Terra is simply starting off the negotiation process with a few hardball tactics, in effect playing hard-to-get so as to bring a better price to the table.

When Terra Industries held its annual meeting Friday and its shareholders, by a slim margin, elected a dissident slate of CF-nominated candidates to Terra's board, Terra CEO Michael Bennett took a question from a shareholder. The question: Given this vote, what are you going to do now?

Implied, of course, was the more pointed question: Are you putting the company up for sale?

According to people at the meeting, Bennett said that he and his company and board had to determine the appropriate "process" by which it could fetch the highest price. Or, as several newswires reported, Bennett said, "The real question is what is the proper course, or proper process, to get to the best ultimate value."

Some in the audience may have taken this to mean that, yes, Terra was for sale, and that a deal with CF was at last in the making. During Friday's regular session, Terra's stock jumped 5% to $40.06 on volume of more than 8 million shares; the average daily turnover is about 2.3 million. During Monday's regular session, the stock gave back some of those gains, falling a little more than 1% to $39.63.

Also on Friday afternoon after the vote, CF representatives spoke with Terra's people, saying that CF was prepared to sit down immediately to negotiate a price and a deal. CF said that if Terra agreed to a merger, the companies could include a so-called "go-shop" provision in the pact, meaning that Terra would be free to seek another buyer at a better price.

Or, CF said, Terra could run an auction.