Terra Industries Inc. Board Subject to Investigation After Accepting the Yara International ASA Takeover Offer

Multiple investigations on behalf of current long term investors in Terra Industries Inc. (Public, NYSE:TRA) over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover were announced.

The investigations by law firms focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of Terra Industries Inc. arising out of their attempt to sell Terra Industries Inc. (Public, NYSE:TRA) to Yara International ASA. After CF Industries Holdings, Inc. (Public, NYSE: CF) for months tried to take over Terra Industries and even filed a lawsuit on February 15, 2010, Terra Industries Inc. (NYSE: TRA) announced that its Board of Directors has unanimously approved a definitive merger agreement under which Yara International ASA (OSLO: YAR.OL) will acquire all of the outstanding shares of Terra common stock for US$41.10 per share in cash or at a transaction value of approximately US$4.1 billion. According to Terra Industries Inc. the offer represents a 23.6% premium over Terra Industries Inc.'s closing price on February 12, 2010, the last trading day prior to its February 15, 2010 announcement.

But according to one investigation by a law firm “the transaction appears to be unfair” to current investors of Terra Industries Inc. (Public, NYSE:TRA) because the “offer to purchase Terra Industries Inc. (TRA) at $41.10 per share appears opportunistically timed to take advantage of the current economic downturn” and is “grossly unfair, inadequate, and substantially below the fair or inherent value of TRA”.

Shares of Terra Industries Inc. (TRA) traded after the announcement at $40.75 per share, and at $34.25 per share just days before the news. TRA shares traded in Dec 2009 at over $43 per share, and reached in 2008 almost $55 per share. Terra Industries Inc. reported in 2007 Total Revenue of $2.34293billion with a Net Income of $201.90million and in 2008 Total Revenue of $2.89148billion with a Net Income of $641.04million.

The investigation “concerns whether the Terra Industries Inc. Board of Directors breach their fiduciary duties to Terra Industries Inc. (TRA) shareholders by agreeing to sell Terra Industries Inc.”, “whether the directors of Terra Industries may have breached their fiduciary duties by not acting in Terra Industries Inc. (NYSE:TRA) shareholders' best interests”, and “the Company may not have adequately shopped itself around before entering into this transaction and, pursuant to this proposed transaction, Yara International ASA may be underpaying for Terra Industries (NYSE:TRA), thus unlawfully harming TRA shareholders”.

Another investigation even calls the deal “suspicious because it appears from a review of Terra's financial statements that the inherent value of the Company's stock is greater than $41.10 per share, because the stock has recently sold for more than $41.10 per share, and also because it appears that the Board of Directors of the Company may not have shopped the Company in an attempt to obtain a better price for the shareholders.”