Why CF Industries (CF) Stock Closed Higher Today
NEW YORK (TheStreet) -- Shares of CF Industries (CF) - Get Report gained by 4.41% to $29.85 on heavy trading volume Monday, after the fertilizer distributor and Dutch rival OCI decided to drop their planned $8 billion merger due to the new U.S. tax regulations on so-called inversion deals.
Under such an agreement, a U.S.-based company merges with a foreign company and moves its headquarters abroad to receive a lower tax rate. Last month, the U.S. Treasury announced new rules to curb corporate tax inversions, which has led companies such as Pfizer (PFE) and Allergan (AGN) to terminate their planned mergers.
CF Industries and OCI were initially going to register their combined company in the U.K., which would have reduced its tax rate to 20% from 34%, the Wall Street Journal reports.
The companies then decided to move the tax residency to the Netherlands, which has a corporate tax rate of 25%, to satisfy the stricter inversion rules introduced in November.
CF Industries will pay OCI a $150 million breakup fee.
About 8.48 million shares of CF Industries were traded so far today, well above the company's average trading volume of roughly 3.82 million shares per day.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
CF's strengths such as its revenue growth, reasonable valuation levels and expanding profit margins are countered by weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.
You can view the full analysis from the report here: CF
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
