3rd UPDATE: Agrium Boosts CF Bid, Offer Still Lags Shares

Agrium Inc. (AGU) said it sweetened its hostile offer for rival fertilizer maker CF Industries Inc. (CF) to around $4.1 billion Monday, though its target's share price continued to lag the revised terms.

The Canadian predator also extended the expiration of its bid by almost a month until June 15, after the scheduled close of CF's own unsolicited bid for smaller U.S. rival Terra Industries Inc. (TRA).

Agrium's CEO, Mike Wilson, and the company's advisers have sought talks with CF, according to people close to the situation, though no meetings are planned.

Wilson told Dow Jones Newswires that he spoke with CF Chief Executive Stephen Wilson on April 8, in the hope of talking about CF's valuation.

"He said: 'Mike, your offers have been grossly inadequate; there's no point in meeting.' I said I wanted...to talk about a significant increase (in the offer) and I could meet with (him) on the weekend. He said there's no reason to meet," Wilson said. "The bottom line is he didn't even want to know what my increase was."

Wilson said it's obvious that the CF board is entrenched in its current position. "So what we've done is gone out to the shareholders and said that, if you want to get a premium on your investment and end up with a share of Agrium, you better get up to CF, because they're not going to engage," Wilson said.

He said Agrium continues to talk to CF shareholders.

The three-way tussle, now in its fourth month, has seen CF reject Agrium's approaches, and cast them as an effort to disrupt its own pursuit of Terra and prevent consolidation in the wholesale fertilizer sector.

Agrium, a leading retail distributor, boosted the cash component of its offer to $40 a share from $35, plus one of its own shares for each CF share, valuing the package at $85.20 based on May 8 closing prices.

In New York Monday, CF shares continue to trail the offer but are up 2.6%, or $1.88, to $75.69 on 531,000 shares. Agrium is down 39 cents to $44.81, while Terra is down 34 cents to $25.07.

While Agrium touted a 53% premium to its own pre-bid level in February, the broader fertilizer sector has strengthened in recent weeks after a prolonged period of weak demand and high raw material costs.

Still, Agrium's Wilson said the new offer presents even a greater premium when CF's cash position of $16-$17 a share is stripped out of the equation.

"I hope they're not - or assume - they're not expecting a premium on their cash in today's markets," he said.

On Monday, CF acknowledged receipt of the bid and said its board "will evaluate the revised proposal carefully."

Terra, the smallest of the trio, has rejected CF's approaches and also pushed back the date of a shareholder vote from May until at least June 8.

Agrium and CF had not engaged in any discussions before CF's annual meeting last month, where Agrium had urged CF shareholders to withhold their votes from the board's slate. Both sides claimed victory, with the three directors re-elected by more than 75% of shareholders, while Agrium had sought to dissuade at least 20% from backing the slate.

The jockeying for position comes as fertilizer producers look to take advantage of the drop in sector stock prices since last summer to buy up production capacity ahead of an expected rebound in prices.

Agrium said as of midnight May 8, 1.3 million of CF's 49.1 million shares outstanding had been tendered.

Company Web Site: http://www.cfindustries.com

http://www.agrium.com

http://www.terraindustries.com

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; [e-mail]

(Brian Truscott in Vancouver contributed to this article.)

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