Canada's Agrium Inc sweetened its hostile bid for U.S. rival CF Industries to $4.52 billion, the latest twist in a three-way takeover battle, but the offer failed to impress CF's investors and the company's shares fell 8.4 percent.

Agrium has been pursuing a deal with CF since February, while CF is itself locked in a hostile battle to take over U.S. rival Terra Industries.

On Wednesday, Terra rejected a sweetened bid from CF, calling the offer inadequate and opportunistic. But Terra has a board meeting scheduled for later this month and CF has nominated a slate to Terra's board. A victory for CF's slate will likely help clinch a deal with Terra.

While CF's shares dropped in premarket trade by $7.24 to $79.15, those of Terra rose $2.06 to $37.60 implying that investors today believe that CF's bid for Terra is more likely to succeed than Agrium's bid for CF Industries.

That (Agrium's latest offer) does not get it done by any means, said one arbitrage investor who has been watching the deal closely.

Agrium said it has raised the cash portion of its bid by $5 and is now offering $45.00 in cash plus one common share of Agrium for each CF share. This implies a deal value of $92.99 per CF share, or $4.52 billion based on Agrium's closing stock price on November 4.

This is Agrium's best and final offer. We have addressed all Canadian and U.S. regulatory concerns and are prepared immediately to execute a fully financed, binding merger agreement, Agrium Chief Executive Mike Wilson said in a statement.

Agrium said its latest offer provides a premium of more than 67 percent to CF's closing price on February 24, 2009, the day before Agrium announced its initial proposal.

Dahlman Rose analyst Charles Neivert said CF's investors seemed to be trading as if the Agrium deal is going to disappear on them.

(Editing by John Wallace, Dave Zimmerman)