Our proposal represents a premium of 34 based on the 30-day volumeweighted average prices for the shares of our two companies, and a 29 premiumbased on the 10-day volume weighted average. Our proposal also represents a 23premium over the closing price of your shares today. Since you first approached us several years ago regarding a combination of ourcompanies, we believe that we have developed mutual respect for the twoorganizations and have both recognized that a combination makes strategic sense.Combining the talents and creative energy of our respective workforces willsubstantially enhance our ability to maximize value for shareholders goingforward. CF respects the strong culture of Terra, an attribute we believe ishighly complementary to our business, and we believe there are attractiveopportunities at the combined company for Terras employees. We anticipate annual run-rate operating synergies from the combination will bein excess of $100 million and your shareholders will share in the value of thosesynergies through their continued ownership of the combined company.
Inaddition, the resulting company would emerge a global leader in nitrogenfertilizer production. Together we would create a company with greater scale andan improved strategic platform better able to compete in a global commodityindustry. The combination creates a larger and better capitalized company thaneither company currently. A combination would provide shareholders greatermarket liquidity, a stronger and more flexible balance sheet and improved accessto capital. We have dedicated considerable time and resources to an analysis of a potentialtransaction and are confident that the combination will receive all necessaryregulatory approvals. We are confident that you agree with this assessment giventhat you initially approached us regarding a combination.
Our proposal is subject to the negotiation of a definitive merger agreement andreceipt of the necessary board and shareholder approvals. Because our proposalis based solely on publicly available information, it is subject to our havingthe opportunity to conduct limited confirmatory due diligence. In addition,because the merger consideration is payable in CF stock, we would provide youwith an opportunity to conduct appropriate due diligence with respect to CF. Weare prepared to send you a draft merger agreement and to begin discussions anddue diligence immediately. We understand that Terras debt may need to be refinanced as a result of thecombination Our proposal is not subject to any financing contingency. In light of the significance of this proposal to your shareholders and ours, aswell as the potential for selective disclosures, our intention is to release thetext of this letter to the public.