Fertilizer Wars! CF Pressures Terra

DEERFIELD, Ill. (TheStreet) -- CF Industries(CF) won't extend the financing commitments for its proposed acquisition of Terra Industries(TRA), putting pressure on its target, which recently spurned a buyout offer for the seventh time since the protracted courtship began in January.

CF, facing its own aggressor in Canada's Agrium(AGU), had received commitments for $2.5 billion in acquisition financing from Morgan Stanley(MS), which also serves as one of CF's consiglieres in the hostile takeover battle. Failing a deal between the two fertilizer producers, Morgan's funding promise will expire on Dec. 31.

CF stopped short of capitulating, of course, saying that any future financing for a deal would be at the mercy of the credit markets. "There can be no assurance that CF ... will take further action to acquire [Terra] or that the financing necessary to fund such a transaction will be available after" the end of the year, CF said in a regulatory filing Tuesday.

On Monday, Terra rejected CF's latest sweetened offer (comprised mostly of cash and some CF stock), which values Sioux City, Iowa's Terra at around $4.6 billion based on the closing price of CF shares Tuesday.

This time, it was a particularly stinging rejection for CF. The Deerfield, Ill., company won a proxy battle at Terra's annual meeting in November, successfully foisting three of its own candidates onto Terra's board.

But those very CF-backed directors voted to dismiss the latest CF bid. As Terra said in its press release Monday, the board's decision was unanimous.