CF Industries (CF) Struggles to Justify Terra Acquisition

The acquisition of Terra Industries by CF Industries (NYSE:CF) was expected to generate major benefits for the company, but so far it has resulted in CEO Steve Wilson having to go on the defensive as corn prices continue to be the main driver of the company, and not the expected benefits of the merger.

CF makes nitrogen and phosphate fertilizers, both crucial material for farmers. The company spent most of 2009 and part of 2010 in hot pursuit of Terra, all the while fending off a hostile bid from Canada's Agrium (NYSE:AGU).

Ultimately, CF emerged the winner of the so-called fertilizer wars when it clinched Terra for $4.6 billion in cash and stock, more than double the initial offer.

The deal made CF the world's second-largest producer of nitrogen, after Norway's Yara (YAR.OL), by increasing its number of fertilizer plants to seven from two. The buyout also brought access to pipelines and barges in the U.S. Midwest, the world's largest corn-growing region.




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