Terra Industries (TRA) has been a takeover target since last fall when CF Industries (CF) made its initial offer of $24.50 (net of a proposed special dividend) per share. That offer was later superseded by an offer from Norway's Yara for about $41.10 per share. CF raised its offer last week to the equivalent of over $47 per share in what appears to be its final play for TRA.
The best time to execute a merger arb trade on TRA would have been last week before CF's latest offer. Now TRA trades at over $45 on speculation that they will abandon their agreement with Yara and seriously consider the new CF offer. That is unlikely, as the appeal of CF's bid is contingent on CF's stock remaining high (one tenth of a CF share is part of the offer for each TRA share). IMHO the speculation on a new deal is unfounded. TRA will likely go with the "bird in hand" and stick with its agreement to sell itself to Yara. Any investor buying TRA over 41 is probably throwing money away.
Nota bene: Anthony J. Alfidi has no holdings in TRA, CF, or Yara at this time.
