* CF increases cash portion of offer $4.75/share
* New bid values Terra at $45.91 per share
* Terra shares up 6 pct, CF up 1 pct (Adds comment from source close to CF)
By Matt Daily
NEW YORK, Dec 7 (Reuters) - Fertilizer maker CF Industries Holdings Inc (CF.N) raised its offer for smaller rival Terra Industries Inc TRA.N by more than 10 percent, bringing the value of the hostile takeover bid to $4.58 billion.
The move is the latest chapter in a year-long, three-way takeover battle and lifts CF’s offer to more than double the $2.1 billion it had originally proposed in January.
The higher bid boosted Terra’s share price in Monday morning trading and is likely to bring new support for CF among Terra shareholders, according to analyst Mark Connelly of Sterne Agee.
“We see this as the first really credible bid they’ve made,” Connelly said.
CF has sought to buy Terra and create the world’s largest publicly traded nitrogen company, even as CF itself tries to fend off a hostile takeover bid from Canada’s Agrium Inc AGU.TO.
CF said it raised the cash component of its bid for Terra by $4.75 per share, to $36.75 per share. It is also offering 0.1034 CF common share for each Terra share, including a $7.50 special dividend.
The new offer given to Terra on Friday values the company at $45.91 per share, based on Friday’s closing CF price. That is nearly 18 percent above Terra’s closing price on Friday.
CF had sought to win a deal with Terra over the weekend and was willing to negotiate on price, but was talking “nickels and quarters at most,” a source close to CF told Reuters.
But after several increases to its bid this year, Terra could expect no better figure now from CF, according to the source.
“We have emptied our pockets and we are done,” the source said.
Terra said in a statement that it has received the new proposal and will review it at a board meeting scheduled for later this week.
Last month, Terra shareholders voted to add three new members proposed by CF to the Terra board, increasing the chances that CF’s attempts to take over its rival would be successful.
But the thin margin of victory for those new directors showed shareholders remained split on whether to back CF’s bid, Connelly said, and kept the door open for Agrium’s efforts to buy CF.
Agrium has offered $45 cash plus one of its shares for each CF share in a deal that values CF at about $5 billion. Agrium said last week it would nominate a slate of directors at CF’s annual meeting in 2010.
CF, which extended $2.5 billion in financing commitments for the potential Terra deal last week, said in a letter to the Terra board of directors dated Dec. 4 that it was “prepared to meet immediately and to sign a merger agreement before the market opens on Monday, December 7th.”
Shares of Terra jumped 6 percent in early trading to $41.41, while CF shares rose 1 percent to $89.42. Agrium shares were up 4.6 percent in U.S. trading to $60.22. (Reporting by Matt Daily; Editing by Gerald E. McCormick and John Wallace)