UPDATE: Agrium Ups CF Industries Offer By 10%, May Go Higher

By Steve Gelsi

NEW YORK (Dow Jones) -- Agrium Inc. on Friday increased its buyout offer for smaller rival CF Industries and held out the possibility that it could go even higher in a sign that plenty of ammunition remains in what's become a three-way merger shootout among fertilizer producers.

Agrium (AGU) offered $35 in cash and on share of common stock in exchange for each share of CF Industries Holding Inc. (CF), with the cash portion representing 10% boost over an earlier offer that CF Industries has rejected.

Based on Agrium's Thursday closing price, the latest offer represents a premium of 35% over CF's closing price on Feb. 24, the day before Agrium announced its initial proposal.

The offer amounts to a price of $74.90 a share for CF Industries, 90 cents higher than the latter's closing price on Thursday. With 48.4 million shares outstanding, the latest offer from Agrium values CF Industries at $3.63 billion.

"We would consider increasing our offer further to reflect any additional value that the CF board and management can demonstrate arising from the combination of our two companies," said Agrium Chief Executive Mike Wilson.

Agrium's initial offer followed an effort by CF Industries to buy smaller rival Terra Industries (TRA) about two months ago.

Since then, the companies have all rejected their respective buyout offers, giving rise to a second round of offers.

All of the merger proposals amount to hostile bids, with management both at CF and Terra having rebuffed their larger suitors.

On March 16, Agrium said it would take its $4 billion offer to buy CF Industries directly to shareholders.

In midday trading Friday, shares of Agrium fell 2% to $39.10, while CF Industries rose 0.4% to $74.30 and Terra Industries lost 1.4% to $29.65.