UPDATE 1-CF Industries rejects Agrium's revised takeover offer

*Calls offer "grossly inadequate"

*To pursue Terra acquisition (Recasts, adds CF comments, background)

March 30 (Reuters) - U.S. fertilizer producer CF Industries Holdings Inc (CF.N) said its board of directors rejected Canadian fertilizer company Agrium Inc's (AGU.TO) (AGU.N) revised takeover offer of about $3.8 billion.

In a statement late on Sunday, CF said its board concluded that Agrium's offer is "grossly inadequate", substantially undervalues the company and is not in the best interests of the company and its shareholders.

CF, which is currently locked in a hostile takeover bid for competitor Terra Industries TRA.N, rejected Agrium's original bid earlier this month as inadequate. At that time, CF also revised its own offer for Terra.

CF Industries, which produces nitrogen and phosphate fertilizers, has said that Agrium's proposal is an attempt to interfere with its proposed takeover of Terra.

"We strongly believe that continuing to pursue our long-term strategy, including our proposed business combination with Terra Industries, is the best way to do so," CF Chief Executive Stephen Wilson said in the statement. Agrium, on Friday, boosted its hostile takeover offer for CF to about $3.8 billion from $3.6 billion by raising the cash component by more than 10 percent. [ID:nN27363496]

Agrium launched its unsolicited offer to buy CF to expand its presence in the nitrogen and phosphate fertilizer markets.

The bid is conditional on CF dropping its takeover offer for Terra, which has rejected both CF's initial bid and a revised proposal.

CF's shares closed at $73.30 on Friday on the New York Stock Exchange, while Agrium closed at $38.34 in New York. (Reporting by Ajay Kamalakaran in Bangalore, Editing by Muralikumar Anantharaman)