CF Industries Holdings Inc. (CF), the fertilizer producer that’s been criticized by activist hedge fund Third Point LLC for its dividend payments, jumped the most in four months after saying it’s considering a master-limited partnership.
CF, the largest U.S. nitrogen-fertilizer maker, rose 11 percent to $237.07 at the close in New York, the biggest gain since July 29.
The company is in talks with financial advisers to evaluate an MLP and “MLP-like structures along with other financial options,” Deerfield, Illinois-based CF said today in a filing containing presentation slides.
MLPs are structured to pay cash to unitholders, shielding the partnership from corporate taxes. Many MLPs are energy-related because the U.S. tax code limits the structure primarily to natural-resources businesses. CF uses natural gas to make nitrogen fertilizer.
Third Point, run by activist investor Dan Loeb, urged CF in July to pay a bigger dividend. CF was trading at an “unwarranted discount” to its fertilizer and chemical peers, according to Third Point’s second-quarter letter to its investors. In October, CF raised its dividend by 150 percent.
Third Point holds a 1.5 percent stake in CF, according to data compiled by Bloomberg.
CF also said in the presentation today that it will “continue to evaluate increasing” the dividend over time.
Susan Fisher, a spokeswoman for CF, didn’t immediately respond to a voicemail and e-mail seeking further comment.
“CF is outlining positive steps sooner than we expected,” Matthew Korn, a New York-based analyst for Barclays Plc, who recommends buying the shares, said in a report today.
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