UPDATE 4-Terra Industries rejects sweeter bid from rival CF

* Terra calls CF offer inadequate and opportunistic

* Says offer not in best interests of its shareholders

* CF says offer "full, fair and compelling" (Adds new details, analyst comment, Agrium comment)

By Michael Erman and Euan Rocha

NEW YORK/TORONTO, Nov 4 (Reuters) - Fertilizer maker Terra Industries Inc (TRA.N) rejected a sweetened $4.1 billion takeover bid from rival CF Industries Holdings Inc (CF.N) on Wednesday in the latest twist in a takeover battle going on since January.

Terra, which has been fending off CF since January, called the latest bid inadequate and opportunistic.

CF on Sunday offered $32 in cash and 0.1034 of a share of CF common stock for each Terra share. The bid includes a special dividend of $7.50 a share that Terra plans to pay.

The bid valued Terra at $40.86 per share as of Wednesday morning. CF had previously made an all-stock bid of 0.465 CF shares for every Terra share, which would amount to $39.93 based on Wednesday stock prices.

Sioux City, Iowa-based Terra said the proposal continues to undervalue its near-term and long-term prospects.

It said the EBITDA -- earnings before interest, taxes, depreciation and amortization -- projections on which CF had based its offer were more than 24 percent below Terra's own projections. Using two of CF's suggested multiples and its own projections, Terra suggested equity values of $51.55 and $57.74 per share.

"This is a gritty management and they value their independence," said Wall Street Access analyst Charlie Rentschler, who has a hold rating on both companies.

Still, Rentschler cautioned about making too much of Terra's earnings projections, which he noted could be affected strongly by commodity prices.

In a separate statement, CF said on Wednesday it had made a "full, fair and compelling offer" that gave shareholders certainty of value and closing. It has put a slate of three directors up for election at Terra's annual meeting, scheduled for Nov. 20.

CF is the subject of its own hostile takeover bid from Canadian fertilizer maker and agricultural products retailer Agrium Inc (AGU.TO).

Agrium on Wednesday reported a 93 percent plunge in its third-quarter profit, largely due to lower prices and margins on crop nutrient sales.

Analysts and investors say CF's revised bid for Terra could spur Agrium to raise its offer for CF before Terra's annual meeting. [ID:nN02432613]

On a conference call with investors, Agrium Chief Executive Officer Mike Wilson said his company will be announcing its next steps in its bid for CF "very shortly."

Fertilizer is an essential ingredient for crop growth, a fact that has fueled deal interest during the past year. As world populations rise, and the amount of arable land remains relatively stable, farmers are looking to produce more food.

Additionally, the advent of genetically modified crops has created a steep demand for fertilizer, as the new seeds require even more nourishment to grow.

Terra's shares rose 89 cents or 2.6 percent to $35.77, while CF's were up $1.52 or 1.3 percent, at $86.73 in midday trading. (Additional reporting by Paritosh Bansal, editing by Dave Zimmerman and Gerald E. McCormick)