WRAPUP 1-Terra sees profit slide, potential plant buy

* Terra Q3 operating earnings to drop 74 pct

* Terra, Agrium in potential fertilizer plant deal

* Terra shares slide, Agrium, CF shares rise

By Matt Daily and Euan Rocha

NEW YORK/TORONTO, Oct 19 (Reuters) - Fertilizer maker Terra Industries Inc (TRA.N) said on Monday weak agricultural and industrial demand would shrink its quarterly earnings by 74 percent, pushing its shares lower in early trading.

Terra also announced it would buy a 50 percent stake in a nitrogen fertilizer plant for $250 million from Agrium Inc (AGU.TO) if Agrium was able to complete a hostile takeover of rival CF Industries (CF.N).

The three companies are locked in a takeover battle that also has seen CF launch a hostile bid for Terra, and CF has accused Agrium of trying to thwart that deal with its unsolicited takeover bid.

Terra said according to preliminary results, it expects third-quarter revenue to be about $347 million, down 56 percent from a year earlier, and its operating income would drop to about $54.2 million from $209.5 million.

Analysts currently expect Terra to report operating profit of $101.3 million, according to Thomson Reuters I/B/E/S, with earnings per share at 56 cents and revenues of $359.3 million.

Sioux City, Iowa-based Terra did not give a per-share earnings figure. Terra will report actual results on Thursday.

The preliminary results were released as its subsidiary Terra Capital announced a $600 million private offering of senior notes due 2019.

One analyst said the offering and the potential asset purchase did not surprise the markets.

"None of these things was unexpected except the lousy earnings," said Michael Judd of Greenwich Consultants.

Agrium's plan to buy CF was expected to create anti-trust issues in Canada, which prompted it to propose the sale of the 50 percent stake in the Carseland nitrogen plant.

The proposed Carseland sale would give Terra 340,000 tonnes of urea and more than 60,000 tonnes of net ammonia annually and certain U.S. assets.

CF launched its bid for Terra in January and has since sweetened its offer, but Terra has repeatedly spurned its overtures. In its latest move to force a deal, CF said it has acquired a 7 percent stake in Terra and has proposed a slate of three nominees for Terra's board. [ID:nN14233387] [ID:nN2872458]

Canada's Agrium launched its hostile bid for CF in February, conditional on CF dropping its bid for Terra.

CF rejected Agrium's initial proposal and subsequent sweetened offers, alleging that Agrium's bid is merely an attempt on the part of its rival to thwart its own bid for Terra, and that Agrium had not resolved its anti-trust issues.

Agrium said that as of Oct. 16, CF shareholders had tendered about 9.1 million common shares, or nearly 19 percent of the outstanding CF shares, in favor of its offer of $40 in cash plus one Agrium share.

"If one of the deals goes through, we see CF being acquired by Agrium," Judd said.

Shares of Terra fell 3.1 percent to $35.23 per in early trade on the New York Stock Exchange, while CF shares rose 2.3 percent to $92.68. Agrium shares climbed 4.3 percent to C$57.49 in Toronto.

(Additional reporting by Steve James in New York)

(Reporting by Matt Daily, editing by Dave Zimmerman)