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CF Industries and Terra Industries Agree to Merger Deal

CF Industries Holdings Inc. and Terra Industries Inc. have entered into a definitive merger agreement (the "CF Industries-Terra Agreement") to combine the two companies. Terra stockholders will receive $37.15 in cash and 0.0953 of a share of CF Industries common stock for each share of Terra common stock. The transaction has a total value of approximately $4.7 billion. The boards of directors of both companies have approved the combination. The transaction has received fully committed financing from Morgan Stanley Senior Funding Inc. and The Bank of Tokyo-Mitsubishi UFJ Ltd. Concurrently with entering into the CF Industries-Terra Agreement, Terra terminated its previously announced merger agreement with Yara International ASA (OSLO: YAR.OL).

"A combined CF Industries and Terra creates a strong leader in the global fertilizer industry with superior assets that will generate long-term value for stockholders, provide more benefits to customers and offer increased opportunities to employees," said Stephen R. Wilson, chairman, president, and chief executive officer of CF Industries. "We are excited to begin working together to become a more competitive global fertilizer player with enhanced scale, a broader strategic platform and enhanced access to capital markets. Our customers will benefit from expanded availability and flexibility of nitrogen product sourcing as a result of the complementary distribution and manufacturing assets of the two companies."

"Terra's board of directors believes that this transaction offers our stockholders a very significant premium for their shares,” said Henry Slack, chairman of the board of Terra. “Taken together with the $7.50 per share special dividend paid by Terra in December, our stockholders are receiving an excellent return on their investment in Terra."

"On behalf of Terra's Board and management team, I would like to express our deep appreciation to our employees, whose hard work and dedication has been instrumental in making Terra the outstanding company it is today,” said Michael Bennett, Terra president and chief executive officer. “We are committed to working closely with CF Industries to integrate our two companies quickly."

Following the closing of the merger, the combined company will be a leading global producer and distributor of nitrogen and phosphate fertilizer products. CF Industries and Terra have complementary strengths in nitrogen, providing breadth and flexibility in product offerings. In addition, the locations of CF Industries' and Terra's facilities together expand the combined company's domestic reach.

Terra's focus on industrial customers and CF Industries' focus on agricultural customers are complementary and ensure greater strength and resilience through industry cycles. Stockholders of the combined company also will benefit from the value generated by CF Industries' world-scale phosphate business. Furthermore, the enhanced scale and improved access to the capital markets for the newly combined company will allow it to build on existing and future growth initiatives to generate stockholder value.

The transaction is anticipated to create annual cost synergies of up to $135 million, driven primarily by the elimination of overlapping corporate functions, optimization of transportation and distribution systems, and through greater economies of scale in procurement and purchasing. The transaction is expected to be significantly accretive to CF Industries stockholders on both a GAAP and cash EPS basis.

On March 5, 2010, CF Industries filed with the U.S. Securities and Exchange Commission a prospectus/offer to exchange on Form S-4 in connection with its pending exchange offer for all of Terra's outstanding common stock. As a result of the parties' execution of the merger agreement, CF Industries will amend the prospectus/offer to exchange to reflect the terms and conditions of the merger agreement. In accordance with the terms of the merger agreement, CF Industries is extending the expiration of the exchange offer to midnight, New York City time, on April 2, 2010.

Under the terms of the merger agreement, following completion of CF Industries' exchange offer, a subsidiary of CF Industries will merge into Terra and any Terra stockholders that did not tender their shares into CF Industries' exchange offer will receive in the merger the same consideration paid in the CF Industries exchange offer. Upon completion of the merger, Terra will become an indirect wholly-owned subsidiary of CF Industries, and Terra common stock will cease to be traded on the NYSE. The merger will require the approval of Terra's stockholders unless CF Industries owns at least 90% of the outstanding shares of Terra common stock following completion of its exchange offer, and, if necessary, after CF Industries' exercise of the top-up option under the terms of the merger agreement.

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