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Fertilizer Wars! Agrium Extends Hostile Bid

Agrium keeps on keeping on with its bid to acquire CF Industries, but the market has grown ever more skeptical that any deals will ever get done.

CALGARY, Alberta (TheStreet) -- Agrium (AGU) extended its hostile takeover bid for CF Industries (CF) - Get Report, saying that it has received better financing commitments from several Canadian banks -- but market players are growing ever more skeptical that any deal will get done between any of the three fertilizer-war dramatis personae.

Monday morning, Agrium announced that it extended its offer's deadline until Jan. 22. The Canadian agricultural-products company, which has pursued CF since February, didn't change its proposal terms: $45 in cash, plus one Agrium share, for each CF share outstanding. Agrium has called this its best and final offer. The previous tender, which expired on Dec. 18, garnered 63% of CF's shares, a majority that Agrium has trumpeted as proof of the quality of its bid.

Agrium also indicated that it improved its acquisition funding for a CF deal by replacing its prior financing commitments with "highly confident" letters from the

Royal Bank of Canada

and the

Bank of Nova Scotia


"We remain committed to acquiring CF and continue to question how the CF board can justify not even responding to our December 2nd letter,'" said Agrium's CEO, Mike Wilson, in a written statement.

CF, of Deerfield, Ill., responded with succinct diffidence Monday, saying in a press release that "Agrium's offer is further away from being compelling than it ever has been."

Agrium's bid is conditioned on CF giving up its nearly year-long struggle to take over

Terra Industries


. It's long been understood that CF's best defense against Agrium is to acquire Terra.

CF, however, seems to have lost momentum of late. Last week, it said it would

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let its own acquisition financing expire

on Dec. 31. This comes after the three directors whom CF successfully pushed onto Terra's board turned against their sponsor by voting along with the rest of the board to spurn CF's latest sweetened offer.

Both Agrium and CF have been lax to give up the ghost on their respective hostile takeover attempts, despite the fact that both companies have been bidding into a rising market. Fertilizer stocks -- notwithstanding a brief pullback last week -- have rallied in the second half of 2009 on what looks to be improving demand for crop nutrients from the recession-induced lows.

Earlier in December,

Agrium said it would nominate

two directors for election to CF's board in a bid to push its takeover through, even though those two directors wouldn't give Agrium a majority.

"It's looking more and more like nothing gets done," said Edlain Rodriguez, an analyst covering the fertilizer industry for Broadpoint AmTech. He pointed to improving sector-wide fundamentals as well as the substantial spread that exists between the offer prices of both hostile bids and the values at which the stocks are trading, with the market circumspect on any deal occurring.

Monday morning, CF shares were trading at $86.79, up 35 cents from the previous close. With Agrium shares trading at $59.75, up 2%, the per-share value of its offer for CF comes to $104.75.

Terra shares, meanwhile, rose 75 cents Monday to $32.65. CF's cash-and-stock bid for Terra is worth $45.72 per share.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.