3rd UPDATE: Agrium Lifts CF Industries Offer; CF Evaluating

(Adds analyst comments in paragraphs 5-6 and updates share prices in last paragraph.)

 
   DOW JONES NEWSWIRES 
 

Agrium Inc. (AGU) boosted the cash portion of its hostile bid for rival fertilizer maker CF Industries Inc. (CF) 10% as the company looks to build shareholder backing for the takeover effort.

CF said it's board would "evaluate" the new approach.

Agrium, which launched an exchange offer to CF shareholders last week, also announced it will wage a proxy effort ahead of CF's annual meeting next month.

The Candian company will recommend shareholders withhold votes for CF's board nominees. The company has scheduled an investor call for 11.00 a.m. EDT (1500 GMT).

An analyst said the addition of $160 million in the context of Agrium's multi-billion-dollar bid for CF is essentially a "neutral" event, but could be aimed at bringing CF to the table to hatch out a friendly deal.

The analyst added that Agrium may not have held a call if not for the "flogging" it took during CF's own investor call earlier this week. While Agrium probably wants to "set the record straight," the analyst expects the company to be "more contained."

The moves are the latest in a three-way battle involving Agrium, CF and Terra Industries Inc. (TRA).

Terra has rejected a hostile offer from CF, which has in turn launched a proxy contest to replace three Terra directors at its annual meeting in May.

Agrium said Friday it was boosting the cash portion of its CF offer to $35 from $31.70. The stock portion of one share of Agrium for one share of CF remains the same.

The latest offer values CF at $74.90 a share, 5.5% higher than Agrium's initial bid of $72, or $3.6 billion in total. CF closed Thursday at $74 as investors have been anticipating a higher offer from Agrium.

"CF Industries' board of directors will evaluate the revised proposal in the context of CF Industries' strategic plans to create shareholder value, including its proposed business combination with Terra Industries Inc.," said Chuck Nekvasil, director of public and investor relations, in a emailed rsponse.

Agrium's president and chief executive, Mike Wilson, said its improved offer shows the company's committment to closing the deal. He also reiterated the offer is a much better alternative for CF shareholders than their company acquiring Terra, which has repeatedly rejected CF's approaches.

CF has so far rejected Agrium's advances, and Wilson said Friday "we don't understand why CF would summarily reject our offer without any attempt to negotiate a mutually beneficial transaction."

The struggle 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's exchange offer for CF is slated to expire at 12 a.m. EDT (0400 GMT) on May 19.

CF shares are up 32 cents to $74.32 with Agrium 2.3% lower at 38.99 and Terra down 3.3% at $29.09.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]

   (Doug Cameron and Andy Georgiades contributed to this article.)