(Updated to provide further detail from CF Industry's press release.)
DEERFIELD, Ill. (
ended its yearlong hostile pursuit of
Thursday, withdrawing its $4.2 billion bid to acquire the smaller fertilizer company.
"It is clear that an acquisition of Terra now would require a significant increase in our offer, given the substantial uplift in equity values in the fertilizer sector," CF's chief, Stephen R. Wilson, said in a statement.
"While the strategic merits of a transaction are undeniable," Wilson added, "it is not in the best interests of CF Industries stockholders to increase our offer to the level that we believe now would be required for Terra to agree to an acquisition."
CF also sold its 7% stake in Terra, accumulated during the latter half of 2009. It made sure to note that it profited on the sale of the shares -- about 7 million, acquired for a total of $250 million, or about $35.71 each -- if the special dividend of $7.50 per share, declared by Terra late last year, is also included.
Terra's stock, which closed Thursday at $32.66, has risen sharply since last January. CF's initial bid for the company, made almost exactly a year ago, was worth about $2.1 billion, but CF had to pony up a succession of sweetened offers as Terra's share price steadily climbed, along with cyclical and commodities-linked stocks across the board.
It remains unclear what the capitulation will mean for CF's defense against its own hostile pursuer,
, whose offer for CF stands at $109.50 a share, given Thursday's closing stock prices. Agrium has nominated two dissident candidates to CF's board; a shareholder vote will take place at CF's next annual meeting, which hasn't yet been scheduled.
Perhaps sensing that Agrium's takeover attempt just became that much more credible, investors applauded CF's decision give up on Terra. Shares of CF spiked 4% to $98 in after-hours trading Thursday after closing the regular session down $1.73 to $93.19.
Terra shares, meawhile, moved slighly lower in after-market action, changing hands recently at $32.59, down 7 cents.
-- Written by Scott Eden from New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.