* Offer extended to Sept. 22
* Offer stands at US $40 plus one Agrium share
* CF Industries says extension a ‘distraction’
* CF shares down 4.2 pct, Agrium shares down 5.1 pct (Adds investor reaction, updates share price)
By Michael Erman and Ernest Scheyder
NEW YORK, Aug 17 (Reuters) - Canadian fertilizer maker Agrium Inc AGU.TO again extended its hostile offer for U.S. peer CF Industries Holdings Inc (CF.N) on Monday, disappointing CF shareholders who had been hoping Agrium would boost its bid.
Agrium pushed back the deadline for CF shareholders to Sept. 22, prolonging the two companies’ struggle for dominance in the North American fertilizer market. The normally quiet fertilizer industry has been thrust into the spotlight after Agrium’s bid for CF, which had already launched its own hostile offer for rival Terra Industries TRA.N.
The industry has become red-hot in recent years as its products have taken hold in developing countries seeking to produce more food.
Arbitrage investors, who speculate on companies involved in ongoing deals, said they were disappointed that Agrium had not raised its price or updated them on the status of their dealings with antitrust officials in Canada and the U.S. CF already has antitrust approvals in both countries, and likely would be able to close a deal with Terra quickly.
“People were hopeful they’d get an update of antitrust and a bump,” said one investor who spoke on the condition of anonymity. “I don’t think it changes a lot, but it wasn’t the outcome I wanted.”
Agrium AGU.N has offered US $40 plus one of its own shares for CF, which CF has rejected as much too low. Agrium’s offer, which had been due to expire on Aug. 19, valued CF at about $4.8 billion at Friday’s close.
CF shares closed down $3.45 to $79.42 on the New York Stock Exchange, while Agrium’s U.S. shares closed down $2.46 at $45.73.
About 10.5 million shares had been tendered under Agrium’s bid as of the close of business on Friday, the company said. That would represent nearly 22 percent of CF’s outstanding shares.
“Despite the fact that CF continues to ignore a clear mandate to conclude a transaction, we will continue to press CF to execute a mutually beneficial merger agreement,” Agrium President and Chief Executive Officer Mike Wilson said in a statement.
“Our offer remains far superior to any alternative articulated by CF, including remaining independent or paying a premium for Terra.”
Several arbitrage investors said they were hoping for a $5 to $10 increase in Agrium’s bid, but Agrium’s Wilson has said his company will not boost its price unless the two companies meet and CF demonstrates more value.
For its part, CF Industries said it still intends to buy Terra.
“Agrium’s offer is very far from compelling, and extending that offer is only intended as a distraction,” the company said in a statement.
The arbitrage spread for the Agrium-CF deal, a measure of the difference between a company’s share price and the price a buyer is offering, widened to about 8 percent on Monday, after the extension was announced, from 6.4 percent on Friday.
That is narrower than the 16 percent spread for the CF-Terra deal, which indicates that investors are more skeptical about that deal’s prospects. (Reporting by Matt Daily and Ernest Scheyder, Editing by Maureen Bavdek and Carol Bishopric)