RPT-UPDATE 2-CF Industries, Yara International end merger talks

Fri Oct 17, 2014 1:00am EDT
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(Repeats to additional subscribers)

By Soyoung Kim and Kanika Sikka

Oct 16 (Reuters) - CF Industries Holdings Inc ended merger talks with Norway's Yara International ASA after the companies failed to agree on terms of a deal that would have created a global fertilizer concern with an enterprise value approaching $30 billion.

Chicago-based CF and Yara said last month they were in early-stage talks about a "merger of equals" that would challenge the world's largest fertilizer producer, Canada's Potash Corp of Saskatchewan, in an oversupplied and fragmented market.

But the discussions ended after CF concluded that a proposed all-stock merger, which would have given the two companies a roughly 50-50 ownership, did not adequately reflect the value of the U.S. company's significant near-term capacity expansions, said a person familiar with the matter.

Despite having identified "significant" operating and financial synergies, CF has determined that any deal would require a share-for-share exchange ratio that exceeds the levels discussed when the two companies first started negotiations and would have to give it a meaningfully higher ownership than 50 percent, the person said.

The talks, which lasted several weeks among top executives from both companies in the United States and Europe, were exclusively focused on the concept of a merger of equals while a takeover of one company by another was never considered, the person added, asking not to be named because the matter is not public.

CF, which announced the termination of discussions late on Thursday, did not disclose the reasons and declined to elaborate. Yara could not be immediately reached for comment.

The companies had not revealed any terms of a potential merger. The proposed deal would have seen CF Chief Executive Tony Will lead the combined company as chief executive with Yara's chairman of the board, Leif Teksum, to serve as chairman, the person familiar with the matter said.   Continued...