UPDATE: Agrium Takes Offer To CF Shareholders In Fertilizer Saga

By Steve Gelsi

NEW YORK (Dow Jones) -- Agrium Inc. said Monday it would take its $3.6 billion buyout offer directly to CF Industries shareholders in the latest saga involving the two fertilizer companies and a smaller rival, Terra Industries.

Agrium (AGU) said CF Industries Holdings Inc. (CF) shareholders would receive $31.70 in cash and one common share of Agrium for each CF share.

Under the deal, CF stockholders would also have the option of receiving for each CF share either 1.7866 common shares of Agrium or $72 in cash, subject to proration.

"CF's refusal to engage in discussions with Agrium left us with no choice but to take our offer directly to CF stockholders," said Agrium Chief Executive Mike Wilson.

CF Industries promptly rebuffed the latest approach from Agrium after management initially rejected the deal on March 9.

CF noted that the cash and stock consideration is unchanged from an initial proposal that was already turned down as "grossly inadequate."

Agrium initially approached CF Industries on February 25 after CF had made a hostile offer to buy Terra Industries (TRA) earlier this year. Terra has now rejected two separate offers from CF, which is now launching an appeal directly to Terra shareholders.

The three-way merger contest pits Agrium's $5.7 billion market cap against the $3.4 billion bulk of CF Industries. Terra Industries weighs in at $2.7 billion.

Over the past two months, CF Industries' share price has climbed to about $70 from $45 as one of the top performers of 2009 in the S&P 500 .

On Monday, Agrium stock rose 2% to $36.85. CF Industries rose 1.7% to $69.81. Terra Industries rose 2.8% to $27.57.