Edgar Filing: CF Industries Holdings, Inc.

425

Filed by Agrium Inc.

(Commission File No. 333-157966)

Pursuant to Rule 425 under the Securities Act of 1933

Subject Company:

CF Industries Holdings, Inc.

Fundamentals of Growth

Agrium:

Growing Across the

Value Chain

June 2009

Fundamentals of Growth

Important Information

This

presentation

does

not

constitute

offer

exchange,

solicitation

offer

exchange,

common

stock

CF Industries Holdings, Inc. (“CF”), nor is it a substitute for the Tender Offer Statement on Schedule TO or the

Prospectus/Offer to Exchange included in the Registration Statement on Form F-4 (including the Letter of Transmittal

and related documents) (collectively, as amended from time to time, the “Exchange Offer Documents”) filed by Agrium

Inc. (“Agrium”) with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2009, as amended. The

Registration Statement on Form F-4 has not yet become effective. The offer to exchange is made only through the

Exchange Offer Documents. INVESTORS AND SECURITY HOLDERS OF AGRIUM AND CF ARE URGED TO READ

THE EXCHANGE OFFER DOCUMENTS AND OTHER RELEVANT MATERIALS FILED WITH THE SEC

CAREFULLY IN THEIR ENTIRETY AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN

IMPORTANT INFORMATION ABOUT THE OFFER TO EXCHANGE.

Copies of any documents filed by Agrium with the SEC are available free of charge through the web site maintained by

the SEC at www.sec.gov, by calling the SEC at telephone number 800-SEC-0330 or by directing a request to the

Agrium Investor Relations/Media Department, Agrium Inc, 13131 Lake Fraser Drive S.E., Calgary, Alberta, Canada T2J

7E8. Free copies of any such documents can also be obtained by calling Georgeson Inc. toll-free at (866) 318-0506.

Agrium,

North,

their

respective

directors

and

executive

officers

and

certain

other

persons

are

deemed

participants

in any solicitation of proxies from CF’s stockholders in respect of the proposed transaction with CF. Information

regarding Agrium’s directors and executive officers is available in its management proxy circular dated April 3, 2009

relating to the annual general meeting of its shareholders held on May 13, 2009. Other information regarding potential

participants in such proxy solicitation and a description of their direct and indirect interests, by security holdings or

otherwise, will be contained in any proxy statement filed in connection with the proposed transaction.

All information in this presentation concerning CF, including its business, operations and financial results, was obtained

from

public

sources.

While

Agrium

has

knowledge

that

any

such

information

inaccurate

incomplete,

Agrium

has

not had the opportunity to verify any of that information.

Fundamentals of Growth

Forward-Looking Statements

Certain

statements

and

other

information

included

this

presentation

constitute

“forward-looking

information”

within

the

meaning

applicable

Canadian securities legislation or constitute “forward-looking statements”

(together, “forward-looking statements”). All statements in this

presentation, other than those relating to historical information or current condition, are forward-looking statements, including, but not limited to,

estimates, forecasts and statements as to management’s expectations with respect to, among other things, business and

financial prospects,

financial multiples and accretion estimates, future trends, plans, strategies, objectives and expectations, including with respect to future

operations following the proposed acquisition of CF. These forward-looking statements are subject to a number of risks and uncertainties, many

of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements.

Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements, include, but are not

limited to, CF’s failure to accept Agrium’s proposal and enter into a definitive agreement to effect the transaction, Agrium common shares

issued

connection

with

the

proposed

acquisition

may

have

market

value

lower

than

expected,

the

businesses

Agrium

and

CF,

any

other recent business acquisitions, may not be integrated successfully or such integration may be more difficult, time-consuming or costly than

expected, the expected combination benefits and synergies and costs savings from the Agrium/CF transaction may not be fully realized or not

realized

within

the

expected

time

frame,

the

possible

delay

the

completion

the

steps

required

taken

for

the

eventual

combination

the two companies, including the possibility that approvals or clearances required to be obtained from regulatory and other agencies and bodies

will not be obtained in a timely manner or will be obtained on conditions that may require divestiture of assets expected to be acquired,

disruption from the proposed transaction making it more difficult to maintain relationships with customers, employees and suppliers, general

business and economic conditions, interest rates, exchange rates

and tax rates, weather conditions, crop prices, the supply, demand and price

level for our major products, gas prices and gas availability, operating rates and production costs, domestic fertilizer consumption and any

changes in government policy in key agriculture markets, including the application of price controls and tariffs on fertilizers and the availability of

subsidies or changes in their amounts, changes in development plans, construction progress, political risks, including civil unrest, actions by

armed

groups

conflict,

governmental

and

regulatory

requirements

and

actions

governmental

authorities,

including

changes

government

policy, changes in environmental, tax and other laws or regulations and the interpretation thereof and other risk factors detailed from time to

time in Agrium and CF’s reports filed with the SEC.

Agrium disclaims any intention or obligation to update or revise

any forward-looking statements in this presentation as a result of new

information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities

legislation.

These

forward-looking

statements

are

based

certain

assumptions

and

analyses

made

light

our

experience

and

perception of historical trends, current conditions and expected

future developments as well as other factors we believe are appropriate in the

circumstances. Expected future developments are based, in part, upon assumptions respecting our ability to successfully integrate the

businesses of Agrium and CF, or any other recent acquisitions.

All of the forward-looking statements contained herein are qualified by these cautionary statements and by the assumptions that are stated or

inherent in such forward-looking statements. Although we believe these assumptions are reasonable, undue reliance should not be placed on

these assumptions and such forward-looking statements. The key assumptions that have been made in connection with the forward-looking

statements include, but are not limited to, CF’s acceptance of Agrium’s proposal and the entering into of a definitive agreement to effect the

proposed transaction, closing the proposed transaction, the market value of Agrium common shares issued in connection with the proposed

acquisition, our ability to successfully integrate within expected time frames and costs, and realize the expected combination benefits and

synergies

and

costs

savings

from,

the

combination

the

businesses

Agrium

and

CF,

any

other

recent

business

acquisitions,

and

our

ability to maintain relationships with customers, employees and suppliers during the course of the proposed transaction.

Fundamentals of Growth

Agenda

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

76% Agrium and 24% CF

Pro Forma Ownership:

•

$40.00

in cash and 1

Agrium share (total consideration of $89.22 as at May 29)

•

Aggregate consideration of $2.0

billion cash and 50.2

million shares

•

CF stockholders may elect mixed consideration, or cash or shares, subject to

proration

Consideration:

Committed

debt

facilities

from

Royal

Bank

Canada

and

The

Bank

Nova

Scotia

Financing:

•

Negotiation of definitive merger agreement

•

CF offer for Terra terminated

•

Receipt of regulatory and other customary approvals

•

Absence of any material adverse changes to CF or its business

•

Our ability to conduct limited confirmatory due diligence

Key Conditions:

•

61% to CF closing price on February 24 and 50% to cash-adjusted premium to CF’s

unaffected stock price

(1)

(based on total consideration of $89.22 as at May 29)

•

An increase of $17.22 or 24% over Agrium’s initial offer of $72.00

Premium:

Agrium to combine with CF in a cash and stock deal

Offer:

Summary of Revised Offer for CF

(1)

See subsequent slides for methodology used for estimating CF’s unaffected stock price.

Fundamentals of Growth

(2) Based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash, Israel Chemicals, K+S,

and Yara. Performance of this peer group based on USD equivalent

stock price movement since

Jan 15. Market trading data as of May 29.

Evolution of Situation

Source: Bloomberg. Daily trading values have been rebased to CF stock price on Jan 15, 2009 (date of CF proposal for Terra)

(1)

Dotted

line

represents

Agrium

current

proposal

for

over

time:

one

Agrium

plus

$40

cash

per

based

Agrium

historical

closing

prices.

$95

Jan 15

Jan 25

Feb 4

Feb 14

Feb 24

Mar 6

Mar 16

Mar 26

Apr 5

Apr 15

Apr 25

May 5

May 15

May 25

Feb 25

Agrium announces

acquisition proposal for CF

($31.70 + 1 share)

with election mechanic

Jan 15

CF announces acquisition

proposal for Terra

CF distances from peer group because of Agrium offer

Mar 27

Agrium increases proposal

for CF

($35.00 + 1 share)

with election mechanic

May 11

Agrium increases proposal for CF

($40.00 + 1 share)

with election mechanic

Current

Proposal(1):

$89.22

CF: $77.64,

64%

Global

Fertilizer

Peers(2): 59%

Mar 23

CF modifies proposal for Terra

Mar 9

CF modifies proposal for Terra

Mar 5

Terra board rejects CF offer

May 15

CF rejects Agrium's

revised offer

Fundamentals of Growth

Summary of Key Arguments

•

Agrium is serious about acquiring CF and CF refuses to engage

–

Several overtures made privately and publicly, each summarily rebuffed

–

Significant costs incurred

–

Willing to sign fully financed and binding merger agreement immediately

•

CF board is precluding CF stockholders from determining outcome

–

Preferred stock in CF's bid for Terra eliminates CF's stockholder vote

–

Core stockholders have sold at prices below Agrium's offer

•

Agrium's offer represents full and fair value

–

CF is trading above the sum-of-the-parts assessment and at a significant discount to

Agrium's offer

–

Significant premium over all metrics

–

Forward-looking multiple in line with precedents, 27% higher multiple than what CF is

offering for Terra

•

Absent engagement from CF and demonstration of additional value,

this is

Agrium's best and final offer

–

CF board should exercise good corporate governance by removing impediments caused by

its poison pill and Section 203 of the Delaware Corporate law thereby allowing its

stockholders to independently assess Agrium’s offer

•

Agrium has extended its offer to June 22, 2009

–

If a compelling majority of shares are tendered, Agrium will continue to pressure CF board

–

compelling

majority

are

not

tendered,

Agrium

will

walk

from

the

transaction

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

•

Three recent private approaches made to CF, each rebuffed

–

Agrium advisors contacted CF’s advisors on May 7th to move forward on a friendly basis:

response received that “it didn’t make sense to meet”

–

Agrium CEO contacted CF CEO on May 8th to discuss meeting to review a substantially

higher proposal: CF unwilling to meet and did not ask us what price we were considering

–

Agrium letter sent to CF board on May 26th: response received May 29 indicating no basis

for meeting

•

Significant costs incurred

–

Bank commitment fees and legal/advisor fees

–

Extensive management time and resources

–

Moving ahead to secure regulatory approvals

•

Unilaterally raised price twice to bring CF to the negotiating table

•

Willing to meet anywhere, anytime

•

Willing to sign merger agreement immediately

Agrium is Serious About Acquiring CF

Fundamentals of Growth

CF Board Is Precluding CF Stockholders

From Determining Outcome

•

CF currently has in place an extensive list of anti-takeover defenses which are

counter to RiskMetrics’

guidelines

–

Poison pill

–

Classified board of directors

–

Stockholders unable to call a special meeting

–

No stockholder action by written consent

•

CF’s poison pill and Section 203 preclude CF stockholders from acting freely

and determining outcome

–

confident

acting

its

stockholders’

best

interests,

should

remove

the

poison

pill

and exempt Agrium from the restrictions of Section 203, thus giving CF stockholders the

opportunity to choose between CF’s position and Agrium’s offer

•

Preferred stock in CF’s bid for Terra prevents CF stockholders from voting on

the merits of the CF / Terra deal

–

believe

stockholders

prefer

receive

premium

than

pay

premium

–

stockholders

not being given the opportunity to vote under CF’s current construct

–

Preferred stock is an end-run around the rights of CF stockholders

–

CF stockholders will experience significant dilution if the Terra deal proceeds

Fundamentals of Growth

CF Board Should Come to the Table

•

Agrium wants to engage and is willing to listen

–

We acknowledge CF’s operational capabilities and achievements

–

Current proposal is the best price based on what Agrium knows

–

We welcome the opportunity to engage and debate directly on value if CF provides new

insight or information

•

Agrium’s efforts are sincere and real

–

We are a fully financed credible buyer and are ready to execute immediately a binding

merger agreement

•

Core CF stockholders have expressed their viewpoints by selling CF shares

well below Agrium’s offer price

–

Significant turnover in positions held by long-term CF stockholders indicates stockholders

don’t believe their wishes will be heard

•

CF stockholders should send a clear message to the CF board by tendering to

Agrium’s offer

–

Agrium will listen to the tender: if a compelling majority tender their shares, Agrium will

continue to press CF to engage

–

CF board should respect the results as well and engage with us if a compelling majority

tender their shares

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

Significant Turnover in CF’s Stockholder

Base by Long-Term Investors

•

Long-term

stockholders are sending a clear message to CF about their perspectives on

fundamental value

•

Since

January

2009,

CF’s

top

stockholders

December

31,

2008

reduced

their positions significantly

–

Excluding

index

and

hedge

funds,

and

party

shareholders,

CF’s

long

term

stockholders sold 78% of their holdings in CF

–

Similar trend apparent for top 25 and top 50 stockholders

•

Appears

GROWMARK

party

major

customer,

CEO

sits

the

board)

has

given

notice

its

intention

sell

1.5mm

(1)

•

Selling

activity

prices

below

Agrium’s

offer

price

does

not

support

standalone

value

for CF in the $80’s as CF has suggested

% Change in Position Since Dec 31

(54.7)%

(60.8)%

(78.4)%

Excluding Index & Hedge Funds, & Related Party Shareholders

(52.1)%

(55.5)%

(70.1)%

Excluding Index Funds & Related Party Shareholders

(39.8)%

(39.7)%

(45.0)%

All Stockholders (Includes long-term & related party stockholders,

index and hedge funds & other stockholders)

Top 50

Stockholders

Top 25

Stockholders

Top 15

Stockholders

Source: 13-F filings per Thomson Financial; available data as of May 29

(1) Per the Form 144 GROWMARK filed on May 11, 2009. Rule 144(h) under the Securities Act

requires that the person filing a Form 144 “have a bone fide intention” to sell shares within a

reasonable period of time.

Fundamentals of Growth

Long-term CF Stockholders Selling

Below AGU Offer Price

Top 15 Stockholder Detail

Position as at

Investor

Style

Dec 31

Mar 31

% Chg Position

BARCLAYS BANK PLC

Index

3,266,198

2,831,879

(13.3)%

STATE STR CORPORATION

Index

3,239,344

2,319,261

(28.4)%

VANGUARD GROUP, INC.

Index

2,731,690

2,359,299

(13.6)%

D. E. SHAW & CO., L.P.

Hedge

1,911,397

587,168

(69.3)%

GREENLIGHT CAPITAL, INC.

Institutional

1,812,938

(100.0)%

GROWMARK (1)

Related Party

1,510,403

AMVESCAP PLC LONDON

Institutional

1,501,561

51,909

(96.5)%

CALAMOS ADVR LLC

Institutional

1,402,650

(100.0)%

AXA FINANCIAL, INC.

Institutional

1,045,483

849,705

(18.7)%

JANUS CAPITAL MANAGEMENT LLC

Institutional

987,721

215,701

(78.2)%

DEUTSCHE BK AKTIENGESELLSCHAFT

Institutional

838,812

703,701

(16.1)%

FEDERATED INVESTORS, INC.

Institutional

790,228

(100.0)%

BANK OF AMERICA CORPORATION

Institutional

756,296

293,655

(61.2)%

PENNANT CAPITAL MANAGEMENT

Hedge

674,279

998,079

48.0%

LAZARD CAPITAL MARKETS LLC

Institutional

662,784

(100.0)%

Top 15 Stockholders

23,131,784

12,720,764

(45.0)%

- Excluding Index Funds & Related Party

12,384,149

3,699,922

(70.1)%

- Excluding Index & Hedge Funds & Related Party

9,798,473

2,114,675

(78.4)%

Source: 13-F filings per Thomson Financial; available data as of May 29. Analysis excludes Agrium toe-hold position

(1) On May 11, 2009 GROWMARK filed a Form 144 giving notice of its intent to sell 1.5mm shares.

Rule 144(h) under the Securities Act requires that the person filing a Form 144 “have a bone fide

intention” to sell shares within a reasonable period of time.

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

•

General downward pressure on fertilizer prices from delayed planting season

and reduced application rates leading to reduced fertilizer purchases

•

Nitrogen and phosphate prices have declined approximately 21% and 25%,

respectively

(1)

, since the day before our offer (February 24)

•

Some inventory carry-over into 2009/2010 fertilizer year

•

Potential impact to CF will not likely be disclosed until Q2 or Q3

•

Minimal interest in Summer fill / Fall prepay volumes

Near-term Fertilizer Outlook

(1)

Source: Green Markets. Nitrogen prices based on NOLA Urea. Phosphate prices based on Tampa

Florida DAP.

Fundamentals of Growth

300

600

900

1200

1500

200

400

600

800

1,000

1,200

$1,400

CF 'Owned' EBITDA

Urea ($ / short ton)

DAP ($ / short ton)

Natural Gas (US¢/MMBtu)

(5)

•

CF’s reliance on short-lived peak 2008 nitrogen and phosphate prices for

current and future valuations is unrealistic and irrelevant

•

Current nitrogen and phosphate prices are NOT at the bottom of the cycle

–

Industry forecasts show nutrient pricing flat-to-down over next couple years

–

A return to cyclical commodity lows as seen pre-2004 would yield substantially lower

EBITDA for CF

Current Nutrient Pricing Above

Historical Averages

(1)

Average

1998

-2007.

(2)

NOLA Urea per Green Markets.

(3)

Central Florida DAP per Green Markets.

(4)

Henry Hub Natural Gas per Bloomberg.

(5)

‘Owned’

EBITDA (consolidated EBITDA less minority interest plus equity investment income) per

CF filings.

10yr Average

(1)

Feb 24

Current

Urea

(2)

$181

$305

$240

DAP

(3)

$193

$315

$250

Natural Gas

(4)

¢498

¢420

¢392

Fundamentals of Growth

•

Expected

operating

margins

for

nitrogen

and

phosphate

facilities

similar

CF’s are significantly lower than peak 2008 levels

Moderate Margins Anticipated for CF’s

Facilities

Illustrative Annual Operating Profit

(1,2)

(1)

Nitrogen gross margin estimates based on NOLA Urea proxy plant gate margins (at 80% rate),

per Blue, Johnson Associates, Inc.

(2)

Phosphate gross margin estimates based on U.S. Central Florida DAP proxy plant gate margins

(at 80% rate), per Blue, Johnson Associates, Inc.

-$100

$100

$300

$500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Proxy Phosphate Plant

Proxy Nitrogen Plant

’00-’07 Avg.

2008

Current

Nitrogen

(1)

$25

$242

$104

Phosphate

(2)

$49

$511

$140

Fundamentals of Growth

CF Earnings Fundamentals vs.

Share Price Performance

•

In 2007, earnings outlook for 2008 was strong, given the then-positive pricing

outlook

•

The current weak pricing outlook does not support CF’s assertions of near-

term EBITDA in line with 2008

500

1,000

$1500

2007

2008

2009

120

$180

Earnings Forecast:

Fertilizer Pricing:

2008A: $1,127mm EBITDA (1)

2007A: $622mm EBITDA (1)

2009E: $622mm EBITDA (2)

Earnings Forecast:

Fertilizer Pricing:

May 29, 2007: $42.42

Jan 3, 2007:

$26.46

Jun 17, 2008: $169.62

2007 Avg Share

Price: $57.94

2008 Avg Share

Price: $110.91

May 29: $77.64 (Nominal)

May 29: $65.1

(Unaffected

Current Agrium Offer

$89.2

Source: CF filings and Bloomberg, market data as of May 29

(1) Represents ‘owned’

EBITDA (consolidated EBITDA less minority interest plus equity investments).

EBITDA attributable to minority interest partner based on reported minority interest per CF filings

($54.6 million and $116.9 million, for 2007A and 2008A respectively) adjusted for D&A, estimated

as a portion of total D&A proportional to reported capex.

(2) Proportional

EBITDA

based

consensus

‘owned’

EBITDA

(consolidated

EBITDA

less

minority

interest plus equity investments) estimates.

Fundamentals of Growth

Analyst Commentary

•

“Compared to other nitrogen producers such as Yara, CF’s stock price has appreciated largely as

a result of Agrium’s bid rather than an improvement in the underlying fundamentals of the

nitrogen/phosphate fertilizer industry. In our view, it would be prudent for investors to

consider taking some profits.”

– BMO (May 7, 2009)

•

“If Agrium’s bid for CF were withdrawn, it would weigh on [CF’s] share price. We raised our

year-end 2009 price target for CF from $50.00 to $70.00, consistent with current $70 share price.

Current share price reflects a discount to the roughly $75 bid by Agrium for CF shares.”

– JPMorgan (April 28, 2009)

•

“Our $72 price target is mainly based upon the value of Agrium’s current bid for CF…This

compares with a $63 valuation based upon our sum-of-parts analysis, utilizing multiples of

4.5x and 6.0x EBITDA for their nitrogen and phosphate businesses, respectively.”

– UBS (April 24, 2009)

•

“We view Agrium as the company

best positioned to take advantage of secular, sustainable

growth across the entire value chain”

– Morgan Stanley (September 4, 2008)

•

“We

view

Agrium

the

company

best

positioned

take

advantage

secular,

sustainable growth

across

the

entire

value

chain”

–

Morgan Stanley (September 4, 2008)

In our view,

utilizing multiples of

Fundamentals of Growth

Sum-of-the-Parts Assessment

By Nutrient

$31.95

$27.28

$16.64

$0.92

$64.15

$19.31

($4.67)

$0.92

$34.10

$39.94

($5.83)

$25.74

$77.41

$100

Nitrogen

Segment (incl.

Minority)

Less -

Nitrogen

Minority

Interest

Nitrogen

Segment

(excl. Minority)

Phosphate

Segment

Net Cash

Other Balance

Sheet

Adjustments

Total Equity

Value

(2)

(4)

(5)

Low to high range

(6)

(3)

(1)

Morgan Stanley potash, phosphate and nitrogen intrinsic value multiples of 10.0x, 8.0x and 6.0x respectively, discounted at 20% to arrive at one-year price target multiples, per Morgan Stanley

convention.

(2)

Value per share using one-year price target EV / 2010E EBITDA multiple range of 4.0x –

5.0x, discounted at 10% to present. 2010E EBITDA estimate per consensus mean 2010E Medicine Hat

minority interest plus estimated minority interest (LTM estimated minority interest D&A assumed constant).

(3)

Value per share using one-year price target EV / 2010E EBITDA multiple range of 4.0x –

5.0x, discounted at 10% to present. 2010E EBITDA estimate per consensus mean estimates, adjusted to

exclude minority interest and include equity investment earnings. 2010E adjusted EBITDA allocated between phosphate and nitrogen

segments based on 2008A phosphate and nitrogen revenue

contribution less nitrogen minority interest revenue from Medicine Hat facility.

(4)

Value per share using one-year price target EV / 2010E EBITDA multiple range of 5.0x –

6.0x, discounted at 10% to present. 2010E EBITDA estimate per consensus mean estimates adjusted to

include minority interest and revenues from equity investment earnings. 2010E adjusted EBITDA allocated between phosphate and nitrogen segments based on 2008A phosphate and nitrogen

revenue contribution less nitrogen minority interest revenues from Medicine Hat facility.

(5)

Value per share of cash and short-term investments less total debt, per CF Mar 31, 2009 balance sheet.

(6)

Value per share of option proceeds.

•

Analysts apply the

highest multiple to

Potash and lowest

to Nitrogen

•

CF owns 66% of the

Medicine Hat facility

and valuation must

be adjusted

appropriately

•

CF’s unaffected

share price trades

in the low range of

the sum-of-the-parts

assessment

Agrium Offer: $89.22

CF Current Trading: $77.64

CF Unaffected: $65.15

One-Year Price Target EV / 2010E EBITDA Multiple

Used for Sum-of-the-Parts Valuation

Date

Research Firm

Potash

Phosphate

Nitrogen

19-May-09

UBS

7.5x

6.0x

4.5x

13-May-09

Merrill Lynch

6.0x

5.0x

4.0x

10-May-09

Morgan Stanley

(1)

8.3x

6.7x

5.0x

Fundamentals of Growth

Analysis of CF’s Working Capital and

Cash Balances

•

CF’s increase in Q1 cash was predictable and is not “new value”

(300)

300

600

900

1,200

Q1'05

Q2'05

Q3'05

Q4'05

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

Q3'08

Q4'08

Q1'09

Cash & Short Term Investments (1)

Working Capital

$ 839.0

$ 28.1

Average Working Capital: $(15.8)

Cash tied up in

working capital

Working Capital $240 million

above historical average or

$4.79 per share²

Q4'08: $224.7

Q3'08: $1,152.2

Q4'08: $625.0

Q4’08 to Q1'09:

Implied cash

funding from

working capital of

$197 million or

$3.92 per share

Q4’08 to Q1'09:

Balance sheet cash

up $214 million, or

$4.26 per share

Source: Company filings as of Mar 31

(1) Short-term investments include auction rate securities until Q4 2007. Auction rate securities were

reclassified as long-term investments in Q1 2008.

(2) Based on fully diluted shares outstanding of 50.2 million as at Jan 31.

Fundamentals of Growth

CF’s Estimation of Unaffected

Stock Price

•

Analysis presented by CF in recent presentations presumes that CF’s

unaffected stock price should reflect the full amount of the sector move since

February 24

•

Agrium believes the entire sector has been influenced by the “echo”

impact of

multiple M&A bids and rumors

•

Analysis presented by CF in recent presentations also presumes the value of

its net cash would appreciate in line with peer equity values

•

Agrium disagrees, as the $16.64 per share of net cash in the business does not

vary with stock price movements

–

One can think of it as “reverse leverage”: absent any M&A noise CF’s stock price should not

move as much as the sector over a period when 35% of its beginning stock price value is

fixed cash

•

CF’s arbitrary selection of the February 24 start date –

even allowing for CF’s

methodology, which Agrium disputes –

provides CF with the highest

“unaffected”

price of any starting calculation date this year

Fundamentals of Growth

CF’s Estimation of Unaffected Stock

Price Uses a Biased Start Date

•

Using reference dates from December 31, 2008 to February 24, 2009, 53% of

results from Agrium’s methodology point to an unaffected price in the $62.50 to

$67.50 range

•

Using CF’s methodology –

which Agrium disputes –

58% of results point to an

unaffected price in the $72.50 to $77.50 range

Source: Bloomberg, company filings; market data as of May 29

(1) CF unaffected price based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash, Israel

Chemicals, K+S, and Yara. Peer group performance based on USD equivalent stock price movement

since base dates. Percentage moves applied to CF’s operating asset value per share on respective

base dates. Results then adjusted back for net cash.

(2) CF unaffected price based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash, Israel

Chemicals, K+S, and Yara. Peer group performance based on USD equivalent stock price movement

since base dates. Percentage moves applied to CF’s stock price on respective base dates.

13%

25%

28%

20%

10%

23%

38%

20%

$60.00 to

$62.50

$62.50 to

$65.00

$65.00 to

$67.50

$67.50 to

$70.00

$70.00 to

$72.50

$72.50 to

$75.00

$75.00 to

$77.50

$77.50 to

$80.00

$80.00 to

$82.50

$82.50 to

$85.00

CF Unaffected Price - Base Date Range from 31-Dec-08 to 24-Feb-09

10%

15%

20%

25%

30%

35%

40%

Unaffected CF(1)

CF Methodology(2)

CF's chosen reference date

of Feb 24 for their

estimation of "unaffected

price" provides an outlier

result when using their

methodology

Fundamentals of Growth

65.18

67.36

67.41

65.47

61.24

64.25

65.32

65.15

66.61

64.82

69.15

63.18

61.10

58.16

64.00

63.84

59%

66%

60%

46%

56%

63%

58%

72%

52%

45%

36%

55%

54%

59%

Implied Agrium Offer Value (May 29 Closing):

Based on Cash-Adjusted Stock Price Movement (1)

$ 89.22

24.5 %

Illustrative

Unaffected

CF Price

(US$)

Stock

Price

Move of

Comp

Since

Jan 15

(%)

Based on % Change in Enterprise Value (2)

Implied

Premium

(%)

37%

32%

36%

46%

39%

37%

34%

38%

29%

41%

46%

53%

39%

40%

Move of

Comp

Since

Jan 15

(%)

Agrium Methodology Yields Relatively

Consistent Results for “Unaffected”

Price

Source: Bloomberg; market data as of May 29

(1)

Stock

price

performance

based

USD

equivalent

stock

price

movement

since

Jan

15.

Percentage

move

applied

CF’s

operating

asset

value

per

share.

Results

then

adjusted

back

for

net

cash.

(2)

USD

equivalent

enterprise

value

change

since

Jan

15.

Percentage

move

applied

CF’s

enterprise

value.

Results

then

adjusted

for

net

cash

arrive

per

equity

value

(unaffected

stock

price).

•

Applying peer stock price or enterprise value growth to CF operating asset or enterprise

values results in an unaffected CF stock price around $65 across

individual peers

Fundamentals of Growth

CF Methodology Did Not Hold True in

Predicting Price Heading Up to Jan 15

•

CF’s methodology predicts a range of prices from $42.50 to $65.00

–

This methodology simply

isn’t particularly instructive

Source: Bloomberg, company filings; market data as of May 29

(1) Based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash, Israel Chemicals, K+S, and

Yara. Peer group performance based on USD equivalent stock price

movement

since base dates.

Percentage moves applied to CF’s stock price on the respective base dates.

19%

15%

11%

19%

15%

$42.50 to

$45.00

$45.00 to

$47.50

$47.50 to

$50.00

$50.00 to

$52.50

$52.50 to

$55.00

$55.00 to

$57.50

$57.50 to

$60.00

$60.00 to

$62.50

$62.50 to

$65.00

Predicted Jan 15 CF Price - Base Date Range from May 30, 2008 to Jan 15

12%

16%

20%

CF Methodology(1)

79% of results under CF methodology higher than Jan 15 observed

Fundamentals of Growth

Estimated CF Unaffected Stock Price of

Approximately $65.00

(1)

Based on peer group of Mosaic, Potash Corp, Intrepid Potash, Israel Chemicals, K+S, and Yara as

at May 29.

(2)

CF net cash on Balance Sheet as of Dec 31 was $12.38 per fully diluted share. CF’s net cash on

Balance Sheet as of Mar 31 was $16.64 per fully diluted share.

•

CF had $12.38 per share in net cash on

hand at December 31, and a further $4.79

invested in working capital versus average

levels

•

For simplicity our illustrative analysis

assumes the market gave credit for most

of the working capital and could therefore

predict

the

$16.64

net

cash

(2)

–

This cash is worth no more today

than it was in January

•

The peer group price increase of 59%

since January 15th is representative of an

increase in the market’s perception of the

value of fertilizer operating assets

–

Gives full credit to peer group

increase, which is partially

attributable to speculation over

sector consolidation

•

Growing CF’s operating asset value per

share by 59% and adding back net cash

per share results in an implied unaffected

CF stock price of $65.15

CF Unaffected Stock Price

30.59

48.51

16.64

CF Stock Price on Jan 15,

1-Day Prior to Terra Offer

Implied Unaffected CF Stock

Price: Operating Asset Value

Grown at Peer Group Price

Performance

CF Net Cash Per Fully Diluted Share

Implied Operating Asset Value Per Share

$ 47.23

$ 65.15

38 %

59 %

Peer Group

Price Increase

Since Jan 15(1)

Implied Unaffected

CF Stock Price

Performance

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

50% Premium to Cash-Adjusted CF

Unaffected Stock Price

(1)

Based on Agrium current proposal of one Agrium share plus $40 per CF share in cash based on

Agrium closing price on May 29.

48.51

72.58

16.64

Unaffected CF Stock Price

Agrium Offer

Implied Operating Asset Value Per Share

CF Net Cash Per Fully Diluted Share

$ 65.15

50 %

Implied Cash-

Adjusted

Premium Today

37 %

Implied Stock

Price Premium

$ 89.22

Fundamentals of Growth

CF Cyclical Move Required:

Unaffected Price

(1)

$120

(Operating Asset Value Method)

•

A cyclical upward move of 35% from the

current Agrium offer would achieve a

future CF stock price of $120 assuming

100% stock election (or reinvestment of

cash into sector)

•

CF stockholders would have to realize an

85% cyclical upward move on CF's

unaffected price, or a 114% move on CF’s

cash-adjusted unaffected stock price, to

achieve

equivalent future value

CF Stockholders Benefit from Higher

Base Received through Premium

Source: Bloomberg; market data as of May 29

Agrium Offer at Illustrative 35% Cyclical Upward Move

CF Cyclical Move Required:

Unaffected Price

(1)

$120

(1)

CF unaffected price based on illustrative peer group of Mosaic, Potash Corp, Intrepid

Potash, Israel Chemicals, K+S, and Yara. Peer group performance based on USD

equivalent stock price movement since Jan 15. Percentage growth was applied to

CF’s operating asset value per share on Jan 15. Results then adjusted back for net

cash.

89.22

120.45

Current Offer Price

Implied Future

Offer Value

35 %

Cyclical

Move

120.45

65.15

Cash-Adjusted CF

Unaffected Price

Future Offer Value

@ 35% Cyclical Move

85 %

Required

Cyclical

Move

16.64

103.80

48.51

CF Unaffected Price

(Less Net Cash)

Future Offer Value

@ 35% Cyclical Move

Net Cash

Operating Asset Value

114 %

$ 65.15

$ 120.45

Required

Cyclical

Move

Fundamentals of Growth

CF’s Statement that it has $40 “Cash Capacity”

per

Share Highlights Magnitude of Agrium Premium

Source: Bloomberg; market data as of May 29

•

Agrium is largely indifferent to acquiring a levered or unlevered CF

–

Assumes no incremental transaction friction costs

•

Should CF decide to raise debt and payout $40/share special dividend, we

would expect CF stock price to decrease by $40/share

•

Decreasing CF’s unaffected share price and Agrium’s offer by $40 cash per

share implies a hypothetical offer of one Agrium share at $49.22

for one cash-

adjusted CF share at $25.15, a premium of nearly 100%

25.15

40.00

CF Unaffected Stock Price May 29, less CF "Cash

Capacity"

Stock Component of Agrium Offer May 29

$ 65.15

96 %

Implied Equity

Premium

Today

$ 49.22

Fundamentals of Growth

Any Increases by CF to its Bid for Terra

Should Result in Lower CF Stock Price

Pro Forma Unaffected CF Stock Price: $63.25

$1.90 Loss vs. Unaffected Stock Price ($65.15)

Pro Forma Unaffected CF Stock Price: $60.32

$4.83 Loss vs. Unaffected Stock Price

Pro Forma Unaffected CF Stock Price: $60.08

$5.07 Loss vs. Unaffected Stock Price

$2.96 per share in Cash

Implied Exchange Ratio of 0.4993x

Implications of a 10% Bump

Estimated Implied Value of Current

CF / TRA Bid (0.4539x)

Source: Bloomberg, market data as at May 29

Note: Pro forma equity value based on unaffected CF price of $65.15 and Terra nominal price of

$27.79 at May 29. Assumes base case exchange ratio of 0.4539x per CF filings.

$4,426

$1,524

$1,226

Net Asset Value

Net Cash

51.5%

48.5%

49.1%

50.9%

51.5%

48.5%

CF Shareholders

TRA Shareholders

Ownership Structure

Component Breakdown

$5,949

$5,652

(94.1mm pro forma shares)

(98.6mm pro forma shares)

(94.1mm pro forma shares)

Fundamentals of Growth

•

Assuming all stock election or reinvestment of cash, Agrium’s offer is a

significant premium to CF’s historical stock price

Average Daily Stock Price Premiums

(30)%

(20)%

(10)%

10%

20%

30%

40%

50%

60%

70%

Jan 2008

Mar 2008

May 2008

Jul 2008

Sep 2008

Nov 2008

Jan 2009

Mar 2009

May 2009

Current

Premium to CF

Unaffected

Stock Price(2):

37%

Daily offer premium assuming $40

in cash had been invested in

Agrium on May 29

Historical Daily "Pro-Rated" Offer Premium to CF

Stock Price (as shown in CF's 14D-9)

Premium Measured vs.

CF Unaffected Price(1)

Premium Measured vs.

Nominal CF

Jan 15

CF Announces Proposal for Terra

Current Offer(3) -

Average

Premium Over 12

Months to

Current: 22%

Source: Bloomberg; market data as of May 29

(1)

Premium of current proposal adjusted daily for net cash to CF’s implied operating asset value per share.

(2)

unaffected

price

based

illustrative

peer

group

Mosaic,

Potash Corp, Intrepid Potash, Israel Chemicals, K+S, and Yara. Peer group performance based on USD

equivalent stock price growth since Jan 15. Percentage growth

was

applied

CF’s

operating

asset

value per share on Jan 15. Results then adjusted back for net cash.

(3)

Agrium current proposal of one Agrium share plus $40 per CF share in cash.

Fundamentals of Growth

41%

23%

82%

58%

33%

48%

63%

17%

42%

37%

88%

142%

20%

40%

60%

80%

100%

120%

140%

160%

Precedent Average for

All Cash: 49.8%

Offer is at an Enterprise Value Premium

to Precedent Transactions

Average 1-Day Prior Enterprise Value Premium for U.S. Transactions Since Sept 15, 2008 >US$1bn

•

When considering precedent transaction premiums, premiums to enterprise value are a

more appropriate

methodology

than

equity

value,

high

leverage

distorts

the

premium

being paid for the business

Highly Levered

Transactions

Source: Company filings, company press releases and Capital IQ; market data as of May 29, 2009

Note: Excludes distressed / financial transactions. High end of range shown for all collared transactions

Note: Enterprise values exclude minority interests and equity investments. Assumes cash from exercise of in-the-money options is not used to repurchase shares

(1) Eli Lilly / ImClone premium based on unaffected share price prior to Bristol Myers’ bid.

(2) CV Therapeutics / Gilead premium based on unaffected share price prior to Astellas’ bid.

(3) Includes NRG / Exelon, Embarq / CenturyTel, Terra / CF, Centex / Pulte and Foundation / Alpha.

(4) Includes Wyeth / Pfizer, Schering Plough / Merck and Data Domain / NetApp.

(5) CF enterprise value based on historical prices and current capital structure, excluding minority interest and equity investments.

Fundamentals of Growth

Selected Precedent Chemical and

Fertilizer

Transactions

–

Equity

Premiums

1-Mo. Avg.

22%

1-Day Avg.

25%

(# deals,

% total)

Chemicals

(13 deals)

Fertilizers

(4 deals

(1)

)

1-Day Avg.

34%

1-Mo. Avg.

31%

CF Jan 15

share price

Current Offer

(2)

CF Feb 24

share price

CF cash-

adjusted

unaffected

share price

(1)

Includes Anglo Potash/BHP Billiton Diamonds, UAP/Agrium, Royster-Clark/Agrium, and

Nu-Gro/United Industries.

(2)

Share price premium to current bid as of May 29.

21%

10%

46%

18%

52%

30%

34%

14%

53%

24%

34%

21%

17%

50%

61%

89%

31%

25%

17%

20%

40%

60%

80%

100%

2004

(2 deals,

15%)

2005

(1 deal,

8%)

2006

(3 deals,

23%)

2007

(4 deals,

31%)

2008

(3 deals,

23%)

2009

(0 deals,

0%)

2004

(1 deal,

25%)

2005

(1 deal,

25%)

2006

(0 deals,

0%)

2007

(1 deal,

25%)

2008

(1 deal,

25%)

2009

(0 deals,

0%)

1-Day Premium

1-Month Premium

1-Day Average

1-Month Average

Source:

Thomson SDC. Closed transactions greater than US$100 million involving U.S. or Canadian targets (greater than 50% stake acquired, excluding distressed

Fundamentals of Growth

61%

89%

50%

26%

40%

26%

27%

29%

39%

20%

40%

60%

80%

100%

1-Day Premium

1-Month Premium

Unsolicited Equity Premiums Analysis

Source: Thomson SDC. Unsolicited transactions since 2000 with enterprise value greater than US$1 billion

U.S.

Targets

–

Announced

Completed

(46 deals)

U.S. Targets –

Not

Completed

(70 deals)

Current Offer

(1)

CF Jan 15

share price

CF Feb 24

share price

CF cash-

adjusted

unaffected

share price

Initial Bid Premium

(2)

Successful / Current

Bid Premium

(2)

(1)

Share price premium to current bid as of May 29, 2009.

(2)

Premium to last market close prior to announcement.

Initial Bid Premium

(2)

Fundamentals of Growth

$72.58

($89.22, less

$16.64 net

cash per CF

share)

(1)

Based on value of mixed consideration and Agrium share price of $49.22 as of May 29.

(2)

Based on CF cash and short-term investments of $839 million less debt of $3.9 million, or $16.64 per CF share as of Mar 31, 2009.

(3)

CF enterprise value based on historical prices and current capital structure, excludes minority interest.

(4)

CF unaffected price based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash,

Israel

Chemicals,

K+S,

and

Yara.

Peer

group

performance

based

USD

equivalent

stock

price

movement since Jan 15. This percentage move was applied to CF’s operating asset value

per share on Jan 15. Results then adjusted back for net cash.

Premiums

(1)

$89.22

Current

offer

Cash-Adjusted Premiums

(1,2)

Significant Premium to CF Stockholders

Across Multiple Metrics

37%

61%

89%

(4)

50%

86%

137%

(4)

$3,596

Current

offer

51%

89%

142%

(4)

EV Premiums

(3)

$1,489

$1,908

$2,388

Jan-15 CF

Price

Feb-24 CF

Price

Unaffected

Price

$47.23

$55.58

$65.15

Jan-15 CF

Price

Feb-24 CF

Price

Unaffected

Price

$30.59

$38.94

$48.51

Jan-15 CF

Price

Feb-24 CF

Price

Unaffected

Price

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

CF’s “Consensus”

EBITDA

•

It is important to note CF does not ‘own’

100% of its consolidated EBITDA

–

CF’s joint venture partner owns 34% minority interest in Canadian Fertilizer Limited

–

CF also has equity in earnings from its interest in unconsolidated affiliate KEYTRADE AG

•

Equity

research

analysts

differ

their

approach

calculating

CF’s

EBITDA

–

Certain

equity

research

analysts

quote

consolidated

EBITDA

where

others

adjust

for

leakage

of minority interest and addition of equity earnings

–

The following table reconciles EBITDA forecasts by analysts who formally cover CF to

provide

estimated

Bloomberg

consensus

view

“owned”

EBITDA,

including

equity

earnings

(1)

Assumed proxy for minority interest EBITDA.

(2)

Minority interest not disclosed. Ratio of minority interest to EBITDA per Nov 19, 2008 report

applied to current forecast EBITDA.

(3)

Analyst reports EBITDA after deducting minority interest and including income from equity affiliates.

(4)

Analyst reports EBITDA after deducting minority interest with no adjustment for income from equity

affiliates.

(US$ millions)

Consensus

Goldman Sachs

BMO

JPMorgan

UBS

Adj. Average

21-May

11-May

28-Apr

19-May

Adiusted

2009E EBITDA Build-up

2009E EBITDA (per Analyst Report)

$712

$584

$642

$593

Less: Minority Interest Adjustment

(56)

n/a

(3)

n/a

(4)

n/a

(4)

Add: Equity Earnings Adjustment

n/a

(3)

Consensus 2009E 'Owned' EBITDA

$656

$584

$649

$599

$622

Adiusted

2010E EBITDA Build-up

2010E EBITDA (per Analyst Report)

$547

$664

$507

$690

Less: Minority Interest Adjustment

(61)

n/a

(3)

n/a

(4)

n/a

(4)

Add: Equity Earnings Adjustment

n/a

(3)

Consensus 2010E 'Owned' EBITDA

$486

$664

$509

$696

$589

(2)

(1)

Fundamentals of Growth

Adjusted EBITDA Multiples

•

Implied valuation multiples must be adjusted to reflect leakage of minority

interest

•

Agrium’s offer for CF represents EV / ‘Owned’

EBITDA transaction multiples of

5.8x and 6.1x for 2009E and 2010E, respectively

(1)

Includes equity investment income.

(2)

Includes estimated LTM minority interest D&A.

(3)

Street consensus minority interest (assumed proxy for minority interest EBITDA).

$1,132

$1,010

$696

$622

$650

$589

($61)

($74)

($122)

300

600

900

$1200

100%

Consolidated

Medicine Hat

Minority

Interest

Adjusted

'Owned'

EBITDA

100%

Consolidated

Medicine Hat

Minority

Interest

Consensus

'Owned'

EBITDA

100%

Consolidated

Medicine Hat

Minority

Interest

Consensus

'Owned'

EBITDA

2009E Street EBITDA

Estimates

2010E Street EBITDA

Estimates

LTM EBITDA

Transaction Multiple: 5.8x

Transaction Multiple: 6.1x

(2)

(3)

(1)

Fundamentals of Growth

Compelling Valuation

–

6.1x

vs.

4.8x

2010E

EBITDA

(1)

using

CF’s unaffected share price adjusted to

exclude the effects of Agrium’s offer

–

Agrium's revised offer implies a higher

transaction multiple for CF than

Agrium’s current trading multiple

(1)

•

Valuation should be considered in context of expected performance

–

Trailing EBITDA multiples irrelevant given short-lived spike in commodity prices in 2008

–

Precedent transactions need to be analyzed in context of the market environment

Agrium / CF vs. CF / Terra

6.1x

4.8x

$89.22

$29.57

Current Offer

Current Unaffected Offer

(2)

(3)

Agrium / CF

CF / Terra

•

Agrium’s revised offer provides a 27% greater EBITDA multiple for CF than CF

is offering for Terra

(1)

Bloomberg consensus 2010 EBITDA estimates; Agrium’s EV/EBITDA multiple is 4.8x. Multiples

calculated on an adjusted ‘owned’ basis to reflect leakage of minority interest and addition of

equity investment income.

(2)

$40.00 cash, one Agrium share using Agrium’s closing price on May 29.

(3)

CF unaffected price based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash,

Israel Chemicals, K+S, and Yara. Peer group performance based on USD equivalent stock price

movement since Jan 15. This percentage move was applied to CF’s operating asset value per

share on Jan 15. Results then adjusted back for net cash.

Fundamentals of Growth

3,203

3,418

1,593

1,660

1,412

1,457

254

669

516

622

496

5,025

4,078

2,656

2,100

1,864

1,707

380

602

481

589

475

1,000

2,000

3,000

4,000

5,000

$6,000

Potash Corp

Mosaic

Israel

Chemical

K&S

Agrium

Yara

Intrepid

Consolidated

Terra

Consoildated

CF 'Owned'

Terra

'Owned'

2009E EBITDA

2010E EBITDA

(1)

Bloomberg consensus consolidated EBITDA, calendarized.

(2)

and

Terra

‘owned’

EBITDA

(adjusted

reflect

leakage

minority

interest

and

addition

equity investment income)

Chemical & Fertilizer Peer EBITDA

Growth

C2009E

–

C2010E

EBITDA

Growth

per

Bloomberg

Consensus

(1)

Peer Average: +38%

57%

19%

67%

27%

32%

17%

50%

(10%)

(7%)

(5%)

(4%)

(2)

•

CF and Terra forecast 2009E-2010E growth is significantly lower than peers

Fundamentals of Growth

0.0x

2.0x

4.0x

6.0x

8.0x

Sep-05

Sep-06

Sep-07

Sep-08

Agrium EV/LTM EBITDA Less CF EV/LTM EBITDA

Source: Capital IQ. Enterprise value = market capitalization plus net debt, preferred shares and

minority interest. EBITDA includes equity investment earnings; minority interest not deducted

(1) Data from Sep 30, 2005 (date of earliest balance sheet post-IPO) through Feb 24, 2009, the

day prior to Agrium’s original offer for CF.

Average EV / LTM

EBITDA Multiple

Spread:

3.4x

•

Agrium has traded over 3 multiples of LTM EBITDA higher (or 59%)

than CF,

since CF’s IPO

(1)

–

Superior diversification across products, businesses and regions

•

Nutrient composition needs to be accounted for in fertilizer valuations

Agrium Multiple Advantage over CF

Fundamentals of Growth

Margin and ROE Comparison

54.2%

30.1%

4.4%

38.1%

8.9%

-5.1%

2.7%

26.6%

20.4%

36.7%

-20%

20%

40%

60%

80%

100%

120%

2004

2005

2006

2007

2008

Agrium

CF Average

Agrium Average

ROE

(2)

(1)

Excludes other operating expenses.

(2)

Return

Equity

Net

Earnings

Average

Book

Value

Shareholders’

Equity.

•

Compared to CF, Agrium benefits from higher and less volatile margins

•

Agrium provides shareholders stable returns through the commodity cycle, in

excess of CF’s returns

EBIT Margins

(1)

Agrium

acquires

Royster-

Clark

Agrium

acquires

UAP

Agrium

acquires

Royster-

Clark

Agrium

acquires

UAP

29.4%

4.6%

21.9%

10.4%

7.7%

7.0%

15.6%

15.2%

21.5%

14.8%

10%

20%

30%

40%

50%

60%

2004

2005

2006

2007

2008

Agrium

CF Average

Agrium Average

Fundamentals of Growth

Precedent Nitrogen Transaction Multiples

•

Valuation multiples vary widely due to volatile natural gas prices relative to nitrogen fertilizer prices

–

Acquisitions are based on forward margin expectations, not trailing margins

•

LTM trading multiples are at recent lows due to record nitrogen sector margins in 2008

–

Many precedent transactions occurred in a rising nitrogen price environment

•

In contrast, current forecasts indicate a narrowing spread between urea and natural gas, with nitrogen

margin compression the likely result

400

800

1,200

1,600

2,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010E

2011E

2012E

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

Transaction Multiples

Natural Gas (US¢/MMBtu)

Urea (US$/ST)

Kemira

GrowHow

Yara

International

LTM Multiple: 8.0x

2007E EBITDA: 7.7x

Margin: 8%

Mississippi Chemical /

Terra Industries

LTM Multiple: 4.5x

Margin: 14%

Saskferco

Products /

Yara

International

LTM Multiple: 7.9x

2009E EBITDA: 4.9x

Margin: 40%

Terra Industries / CF Industries

(1)

LTM Multiple: 3.0x

Unaffected LTM Multiple

(2)

: 2.7x

Unaffected 2010E Multiple

(2)

: 4.8x

Margin: 31%

Unocal (Agriculture business) /

Agrium

LTM Multiple: 6.5x

Margin: 12%

CF Industries / Agrium

(1)

LTM Multiple: 3.6x

2010E Multiple: 6.1x

Margin: 26%

(3)

(4)

(1) Multiples based on current trading, adjusted for ‘owned’ EBITDA (excludes minority interest, includes equity investment income).

(2) CF actual share price at Jan 15 of $47.23 grown at 5% to Mar 20 (the trading day prior to

CF’s current bid), consistent with global fertilizer peer growth over same period.

(3)

Henry Hub, from Bloomberg. Forward-looking estimates per Bloomberg consensus.

(4)

NOLA Urea historical based on Green Markets, forecast based on Fertecon.

Fundamentals of Growth

•

Anticipate annual synergies of approximately $150 million from Agrium/CF

combination, phased in over three years

Consolidation of the sales, marketing and distribution systems by

•

utilizing Agrium’s and CF’s combined broad distribution network to reduce

logistic costs

•

reduce total product miles shipped and optimize railcar lease costs

•

leverage underutilized distribution facilities

Sales, Marketing and

Distribution

Description

Source

Realization of cost savings associated with

•

enhanced economies of scale in purchase/procurement of products and

services

•

optimization of plant turnarounds and operating costs

•

reduction of duplication in product inventory and associated carrying costs

•

catalyst and spare parts inventory pooling

•

enhanced efficiencies in future capital expenditures

Procurement of Plant

Materials, Equipment

and Logistics Services

•

Eliminating corporate functions and overhead reductions (e.g. headquarter

consolidation) and utilizing SG&A excess capacity

SG&A Costs

Significant Synergies from

Combination of Agrium and CF

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

Summary of Key Arguments

•

Agrium is serious about acquiring CF and CF refuses to engage

–

Several overtures made privately and publicly, each summarily rebuffed

–

Significant costs incurred

–

Willing to sign fully financed and binding merger agreement immediately

•

CF board is precluding CF stockholders from determining outcome

–

Preferred stock in CF's bid for Terra eliminates CF's stockholder vote

–

Core stockholders have sold at prices below Agrium's offer

•

Agrium's offer represents full and fair value

–

CF is trading above the sum-of-the-parts assessment and at a significant discount to

Agrium's offer

–

Significant premium over all metrics

–

Forward-looking multiple in line with precedents, 27% higher multiple than what CF is

offering for Terra

•

Absent

engagement

from

and

demonstration

additional

value,

this

Agrium's best and final offer

–

CF board should exercise good corporate governance by removing impediments caused by

its poison pill and Section 203 of the Delaware Corporate law thereby allowing its

stockholders to independently assess Agrium’s offer

•

Agrium has extended its offer to June 22, 2009

–

If a compelling majority of shares are tendered, Agrium will continue to pressure CF board

–

compelling

majority

are

not

tendered,

Agrium

will

walk

from

the

transaction

Fundamentals of Growth

Introduction

A Question of Governance

Standalone Value of CF

Premiums Analysis

Transaction Valuation

Conclusion

Appendix

Stockholder Observations

Fundamentals of Growth

Timeline of Events

•

Agrium confirms best and final offer absent engagement by CF (6/3)

•

Agrium extends exchange offer to June 22 (6/3)

Jun 3

•

Agrium increases offer to acquire CF (5/11)

–

$40.00 in cash plus 1 Agrium share

•

CF Board rejects Agrium’s revised offer (5/15)

May 10

•

CF extends exchange offer to June 26 (5/22)

May 17

•

CF stockholders withhold ~20% of votes for CF directors (4/21)

•

CF extends exchange offer to June 12 (4/24)

Apr 19

•

ISS recommends stockholders do not withhold on CF directors (4/12)

Apr 12

•

Agrium files exchange offer to acquire CF (3/16)

–

Disclosed 2.6% toe-hold position established in February

Mar 15

•

CF files 14D-9 (3/23)

•

Agrium increases offer to acquire CF and launches withhold vote

campaign (3/27)

–

$35.00 in cash plus 1 Agrium share

Mar 22

•

CF Board rejects Agrium’s proposal (3/9)

•

CF amends proposal to acquire Terra (3/9)

–

Introduces collar; claims value of revised offer increased to $27.50;

unaffected

price

would

suggest

otherwise

–

Restructured offer to include non-voting preferred stock: attempting to

circumvent CF stockholder vote

•

Terra Board rejects CF’s revised proposal (3/11)

•

CF launches proxy contest to elect three directors to Terra Board (3/12)

Mar 8

•

CF Board rejects Agrium’s revised offer (3/29)

•

Agrium files amended exchange offer to acquire CF (3/30)

Mar 29

•

Agrium announces proposal to acquire CF (2/25)

–

$31.70 in cash plus 1 Agrium share

–

Fully-committed financing

•

CF files exchange offer to acquire Terra (2/23)

–

Extensive conditionality

Feb 22

•

Terra Board rejects CF’s offer (3/5)

Mar 1

•

CF announces proposal to acquire Terra (1/15)

–

100% stock transaction, $20.00/share

–

Transaction subject to CF stockholder vote under NYSE rules

CF / Terra

Jan 11

Agrium / CF

Week

(1)

unaffected

price

based

illustrative

peer

group

Mosaic,

Potash

Corp,

Intrepid

Potash,

Israel

Chemicals, K+S, and Yara. Peer group performance based on USD equivalent stock price

movement since Jan 15. This percentage move was applied to CF’s operating asset value per

share on Jan 15. Results then adjusted back for net cash.

(1)

CF restructures collar; claims value of revised offer increased to $30.50;

unaffected price of CF shares would suggest otherwise (3/23)

Terra Board rejects CF’s revised proposal (3/24)

•

(1)

Fundamentals of Growth

Wide Range of Outcomes Under CF

Methodology for “Unaffected”

Price

•

Using

CF’s

methodology

and

reference

dates

from

December

31,

2008

February

24,

2009

–

which

Agrium

disputes

–

wide

range

results

are

achieved

–

Analysis

shown

before

CF’s

addition

$3.00

“short

interest”

per

Source: Bloomberg, company filings; market data as of May 29

(1) CF

unaffected

price

based

illustrative

peer

group

Mosaic,

Potash

Corp,

Intrepid

Potash,

Israel

Chemicals, K+S, and Yara. Peer group performance based on USD equivalent stock price growth

since base dates. Percentage moves applied to CF’s stock price on the respective base dates.

Reference

Date

Reference Date

"Unaffected Price" (CF Methodology)

Reference Price

Fundamentals of Growth

$85

31-Dec-08

07-Jan-09

14-Jan-09

21-Jan-09

28-Jan-09

04-Feb-09

11-Feb-09

18-Feb-09

Reference Date

CF Unaffected Price(1)

Reference Price

Feb 24

Max: $74.55

Jan 22

Min: $60.21

Wide Range of Outcomes from Agrium

Methodology as Well

•

However, Agrium’s reference date provides outcome within the reference

range, versus being an outlier

Source: Bloomberg, company filings; market data as of May 29

(1) CF unaffected price based on illustrative peer group of Mosaic, Potash Corp, Intrepid Potash, Israel

Chemicals, K+S, and Yara. Peer group performance based on USD equivalent stock price

movement since base dates. Percentage moves applied to CF’s operating asset value per share on

the respective base dates. Results then adjusted back for net cash.

Agrium reference

date: $65.15

Range: $60 -

$75