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Monday, 02/15/2010 8:42:45 AM

Monday, February 15, 2010 8:42:45 AM

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FEBRUARY 15, 2010, 6:23 A.M. ET.Yara to Acquire Terra in $4.1 Billion Deal

Wall Street Journal


STOCKHOLM—Norwegian fertilizer company Yara International ASA Monday said it has agreed to acquire Terra Industries in a deal valued at $4.1 billion.

Yara said it planned to fund the acquisition by raising between $2 billion and $2.5 billion in a rights issue.

The company also reported a better-than-expected fourth quarter net profit, as global fertilizer demand has picked up from last season, when financial stress and risk aversion by distributors and farmers led to de-stocking in addition to lower application.

Yara's fourth-quarter net profit rose to 1.42 billion Norwegian kroner ($240.7 million) from a loss of 2.11 billion kroner a year earlier, above analysts' expectations for 472.2 million kroner. The net profit was boosted by a 1 billion-krone tax credit. "We saw a major improvement in fertilizer markets towards the end of the fourth quarter, as global nitrogen and phosphate markets turned demand-driven," said Jorgen Ole Haslestad, President and Chief Executive Officer of Yara.

Revenue in the fourth quarter was 13.40 billion kroner, down from 18.76 billion kroner a year ago, and below analysts' expectations for 14.12 billion kroner.

Analyst Are Grongstad at Agilis Faerder, which has a "strong buy" rating with a target price of 350 kroner for Yara, said the company's numbers were very good overall.

"Revenues were a bit disappointing, but margins and net income were very good numbers," Grongstad said, adding that the news on a deal with Terra Industries was also positive.

Based in Sioux City, Iowa, Terra has about 940 employees in the U.S. and Canada. Yara employs 8,000 people world-wide and provides fertilizer to 120 countries.

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